Ex-World Bank chief warns GCC not immune from crisis

EX-WORLD BANKER: Recent photo of James Wolfensohn, World Bank president from 1995 to 2005. (Getty Images)

The GCC countries are unlikely to escape from the global economic crisis unscathed, the former president of the World Bank said on Sunday.

"If I look at history… it is very, very rare for an area of the world to be left out from what is happening in the rest of the world," James Wolfensohn said at the Leaders in Dubai business forum.

"Real estate is clearly vulnerable not just here, but everywhere… I would be very surprised if anywhere in the world is a place to hide."

The liquidity crisis crippling global markets is unlike anything seen since the 1930s and has been prompted by what he called "considerable excesses" in the financial system.

Last year alone, $631 trillion worth of derivatives were traded globally, which is more than ten times the gross domestic product (GDP) of the world combined, he noted.

"The speed and vigour of this downturn, I think, took everybody by surprise," Wolfensohn said.

"These changes are not gradual, they're not even substantial bumps, they're almost tectonic shifts."

To demonstrate the global nature of the crisis, he pointed out that that six months ago, the general consensus was that China would post double digit growth this year.

The Chinese economy expanded by 9 percent in the third quarter and is predicted to grow by only 5.8 percent in the fourth quarter.

Separately, Wolfensohn said the Arab World's bourgeoning young population - 100 million Arabs are between 15 and 29 years old – was an asset for the region, but that education and employment will pose major challenges.

"You are getting very poor returns on the education that you have given them. The job market is presenting them with enormous challenges when they want to apply their skills," he said.

Wolfensohn was president of the World Bank from 1995 to 2005 and is one of only three presidents in the bank's history to be reappointed for a second five-year term.

He became chairman of Citigroup International Advisory Board in 2006 and is an advisor to Citigroup's senior management on global strategy and on international matters.

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