Global economy in unsure takeoff: World Bank chief economist

Global economic outlook is gloomier than six months ago, and there are a couple of dangerous signs that the economy could stall once again, the World Bank's chief economist Kaushik Basu told Xinhua in an interview on Wednesday.

Six months ago, economists believed the global economy was going to undertake a slow and clear takeoff, but data over the past few months suggests the takeoff is unsure, according to the economist, who is also the senior vice president of the bank.

This judgment is echoing the International Monetary Fund's (IMF) latest research result, in which the Washington-based institution lowered its global economic growth forecasts for 2014 and 2015 and said the global economic recovery was weak and uneven.

Basu also warned of the possibility that the world economy would stall once again and said it was a "risk we need to contend with".

The slowdown areas were primarily eurozone and Japan, Basu said, adding the growth of the eurozone was close to zero.

Germany, the center pillar of the region, is growing slightly above zero, and other euro countries, such as Italy, are experiencing negative growth. And the Japanese economy is in stagnation.

Although the U.S. economy is the bright spot in advanced economies and has achieved progress in reducing unemployment rate, the economy is still facing underlining weakness. The large size of the long-term unemployed in the U.S. is threatening to erode its labor market skills.

According to Basu, the global labor market is gradually becoming a common pool.

"Today you can sit in Beijing and work for a U.S. company, and work in Manila or Bombay for a European or Australian company," said the economist.

Beneath the risks from 2007 financial crisis is the changing structure of the global labor market, he said, adding that job creation is important to both advanced and emerging economies.

Despite dangerous signals, the world economy still has some bright spots, according to the economist.

The U.S. economy seems to recover from the crisis and is doing "reasonably" well, with growth rate above 2 percent.

According to Basu, the U.S. labor market is open and flexible, and immigrants will energize the economy. In addition, in view of its investments around the world, the U.S. is an important drive for the world economy.

As for the Eurozone, he said that the European Central Bank was taking measures.

"As they are trying all kinds of policies to get the economy going, the Eurozone might recover," the economist noted.

CHINESE ECONOMY

Basu mentioned the impact of slower Chinese economic growth to the world economy. The slowdown of Chinese economy will affect its trading partners, such as Africa, Germany and India, as well as its outbound investment destinations, he said.

However, the growth drive will mainly come from emerging economies, such as China and India, over the next 15 or 20 years, said the economist.

He expected the Chinese economy to grow 7.4 percent this year, slightly lower than the previous forecast

Despite the slower growth, China is still the growth leader, said Basu.

He noted that the Chinese economy does face short term challenges, such as overinvestment and debt issues, but the long-term outlook is fine. The Chinese authorities were fully aware of the risks, and China was moving toward a more consumption-led economy, said the economist.