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Recession return unlikely: World Bank

The global recovery continues to be “very uncertain,” but a double-dip recession is unlikely, the World Bank president said in an interview to an Indian news channel.

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In June, the World Bank had warned of a possible double-dip recession in some countries if investors lost faith in efforts in Europe and elsewhere to tackle rising debt levels.

“I don’t think that there will be a double dip and I would not say a percentage figure because I think it’s not likely,” Robert Zoellick told NDTV channel.

“But, what I would say is this, we are far from finished...I think that there is a problem with confidence.”

In the aftermath of the European debt crisis, the World Bank had called for “significant” fiscal consolidation in advanced economies, adding the quicker it happened, the better it would be for developing economies.

“...there are definitely risks out there and this is still a very uncertain recovery and therefore it’s important for government to try to focus on the structural policies,” Zoellick said.

Zoellick advocated the need for a flexible exchange rate policy but downplayed the importance of currency appreciation in addressing global trade imbalances.

The United States has been cajoling China to allow its yuan currency to rise faster, and accuses it of keeping it undervalued to gain a trade advantage.

Foreign exchange rates are central to the current account imbalances debate, with the United States initially advocating the need for numerical targets as a tool to iron out rifts between export-rich countries and debt-laden consumer nations.

“I believe that currency should appreciate but I also don’t believe that it is the only available solution,” Zoellick said.