The crisis in Europe, Japan and the United States could spread throughout the rest of the world, warns World Bank President Robert Zoellick.
"A crisis made in the developed world could become a crisis for developing countries," he says. "Europe, Japan and the United States must act to address their big economic problems before they become bigger problems for the rest of the world.
Quoting Zoellick, Reuters says protectionism and populist policies in the developing world could emerge as nations face increasing head winds from a growing European sovereign debt crisis and a weakening economic recovery in the United States.
According to Zoellick, more than 50 percent of developing countries' budgets have deteriorated by 2 percent of gross domestic product since 2007, and more than 40 percent of developing nations now have government deficits in excess of 4 percent of GDP.
"If the situation deteriorates further, then developing countries' growth could turn down, their asset prices could drop and then their non-performing loans could increase," Zoellick told Reuters.
Zoellick said $6.1 trillion was wiped out globally in stock market declines over the past couple of months, which is equivalent to 10 percent of global GDP.
Zoellick said he was paying close attention to consumer and business confidence in emerging economies, notes Reuters.
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