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Wold Bank boss warns protectionist actions may exacerbate crisis

14 March 2009 09:32 (UTC +04:00)

BAKU-APA. The World Bank president has said that 2009 is turning into "a very dangerous year" for the global economy.
Robert Zoellick warned G20 members against protectionist policies, ahead of a G20 finance ministers’ April 2 meeting in London on how to tackle the economic downturn.
"If the leaders feel they are running out of constructive tools, they might start to point fingers and take protectionist and isolationist actions and those are the negative spiral of events you saw in the 1930s", Zoellick noted.
The G20 finance ministers are gathering in Horsham, outside London, on Saturday to lay the groundwork for a G20 heads of state summit on April 2.
Zoellick added fiscal stimulus without appropriate reform, such as wiping toxic assets from banks’ balance sheets, would be "just a sugar high."
Zoellick said that governments may have to provide fiscal stimulus into 2010, but stressed that such action should come "within a framework of fiscal sustainability".
Finance ministers and central bank leaders from the United States and Europe are divided on whether stimulus packages or tighter regulation of the finance sector should be the way forward.
While the US wants a concerted international stimulus to fight the slowdown, some European leaders favour tightening regulation of markets and institutions.
Timothy Geithner, the US treasury secretary, said on Wednesday that he
would recommend the G20 nations to support "substantially increasing emergency IMF resources" and called for them to lend to countries hit hard by the financial crisis.