Asia to Dominate World Economy

Oct. 19 (Bloomberg) -- Bank of Israel Governor Stanley Fischer said the global economy’s “center of gravity” is moving to Asia and that the region will dominate in the future.

The U.S. will have less influence with global institutions as nations such as China and India carry more weight, Fischer said. The International Monetary Fund’s first deputy managing director from China is “on his way” in the next few years, he said, adding that it is already known who will occupy the post.

“Now that the center of gravity is moving, these countries want to take a larger role in running the global economy,” Fischer said today at a Tel Aviv University symposium on China, Israel and the world economy. “The crisis has accelerated this process.”

The IMF this month forecast that Asia’s emerging-market economies will expand 6.2 percent in 2009 while the U.S., Europe and Japan all contract. Fischer, 66, who previously served as deputy managing director of the IMF and vice chairman of Citigroup Inc., said China’s economy is 16 times larger today than it was 29 years ago.

The Chinese economy, the third largest in the world after the U.S. and Japan when measured in purchasing power, is likely to overtake the U.S., he said.

“China will catch up reasonably quickly,” Fischer said. Still, the country’s fast growth pace can’t continue “forever” and expansion is likely to slow in the future, he said.

China’s plan to move rapidly toward clean energy could provide an opportunity for Israel in joint development of these types of technologies, Fischer said.

Israel has managed to overcome the worst of the global crisis “relatively well” and growth has been restored, he said. Still, unemployment is “too high” at 8 percent, he said.

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