Europe must not count on BRICS bailout, says Zoellick
2011-09-20 17:51:33
World Bank President Robert Zoellick warned on Monday that cash-rich emerging economic giants cannot be counted on to rescue the troubled eurozone.
On the contrary, he said, the loss in confidence in the advanced economies could hit investment and consumer demand in the developing world, adding to the global economic turmoil.
"If one looks closely at the statements coming out of China or other emerging markets, there is a sense they are trying to support the developed world and particularly the eurozone at a point of crisis," Zoellick told journalists in a conference call.
"But that's different than putting up money," he said.
There has been some talk in recent weeks that the emerging BRICS economies - Brazil, Russia, India, China, and South Africa - could tap their huge reserves to support Europe, being dragged toward possible recession by the debt problems of Greece, Portugal, Ireland and others.
But Zoellick, who last week blasted leading advanced economies for irresponsible policies that are dragging down the rest of the world, played down any hopes for a BRICS rescue.
"Now there may be occasions where sovereign funds may be willing to make various investments, they put their money for example in various assets," he said.
"But you also see the hesitancy in voices out of China about putting the money that's been hard-earned by people who have a per capita income of $4,000 and bailing out Europe. So I just don't think that's going to happen."
He added that the BRICS themselves were threatened by the problems in Europe and the United States.
"Developing countries have less fiscal space than in 2008 to counter a downdraft," he said.
"The drop in markets and confidence could prompt slippage in developing countries' investment, and a pull-back by the consumers too. A fall in developing countries' demand would mean would mean we'd lose their economic engines as drivers of global recovery."
"We need to watch out, especially if the eurozone and the US remain off course."
Zoellick was speaking ahead of this week's meetings of the World Bank and the International Monetary Fund in Washington, where the eurozone crisis is expected to be a key topic of discussion.