Zoellick: world economy has entered ‘new danger zone’

World Bank chief Robert Zoellick has warned that the world economy has entered a "new danger zone" because investors have lost confidence in leaders.

The past two weeks have seen huge falls in world markets which have been put down in part to an American credit downgrade and fears over the ability of some European governments to repay their debts.

"What's happened in the past couple of weeks is there is a convergence of some events in Europe and the United States that has led many market participants to lose confidence in the economic leadership of some key countries," said Zoellick (above).

"I think those events combined with some of the other fragilities in the nature of recovery have pushed us into a new danger zone. I don't say those words lightly."

Zoellick said that developing countries are now the source of growth.

Read a full report at BBC News. ·