London: The world economic crisis will be deeper and longer if government stimulus packages are too modest and states fail to take joint action to fix their banks, World Bank President Robert Zoellick said on Friday.
Warning that 2009 will be a "very dangerous year", he said state stimulus alone would give only a short-lived economic boost that would soon evaporate unless credit flowed again.
"The danger now is doing too little, too late," Zoellick told reporters in London as G20 finance ministers and central bankers gathered in southern England ahead of a leaders' summit next month. "Incrementalism will prolong and increase risk.
"If you don't take on the banking issue, the stimulus is just like a sugar high. It pushes some energy into the system but then you get the letdown unless you reopen the credit markets."
Japan yesterday joined the US push for more government spending to fight the economic crisis before the G20 summit marked by a rift between Washington and Europe on the priorities in the battle with the global crisis.
Zoellick urged the G20 finance ministers to expand the IMF's resources, condemn protectionism and endorse practical steps to rescue the world economy.
Controversy: Britain plays down embarrassing document
Britain has sought to play down a document that showed the government treating some countries as more important than others in the G20 group.
The Financial Times said it had obtained a tender issued in December by the government to supply public relations services for the London G20 leaders summit in April, which identified 11 countries as the top priority.
The tender focused on 11 high priority states - the United States, Japan, Germany, France, China, India, South Africa, South Korea, Brazil, Italy and Saudi Arabia, the newspaper reported.
