Is America's economic power declining?

US Economy

It was where the global financial crisis began, all those months ago. The greedy bankers and reckless lenders of America got the ball rolling on what has been the worst financial downturn since the Great Depression.

Although we seem to be through the worst of it, there are conflicting reports as to whether the US is in fact recovering. But it appears that, even if the US has recovered, some of the damage caused by the recession has been irreparable.

As a result, US economic power is declining.

That's the situation according to World Bank boss, Robert Zoellick. In a statement he said: "One of the legacies of this crisis may be a recognition of changed economic power relations." Despite the US still being the world's largest economy, it has now officially been in recession for almost two years, whilst the emerging economies of countries such as China and Brazil have emerged stronger and in growth.

Zoellick even went as far to say that this could even bring about a long-term re-balancing the global economy.

"A multi-polar economy less reliant on the US consumer will be a more stable world economy," Mr Zoellick said, speaking in Istanbul before meetings of the the World Bank and International Monetary Fund (IMF), where there is some discussion about how to reorganise the leadership of the bodies so that they better reflect the diversified world.

Already, China has gained a permanent chair on the IMF's 24-seat policy-making committee.

At a meeting in Istanbul, Finance ministers from the Group of Seven (G7) richest nations - the US, Japan, Germany, UK, France, Canada and Italy - it said the world economy was improving but "there is no room for complacency since the prospects for growth remain fragile and labour market conditions are not yet improving," reports the BBC.

Amid shoots of optimism, last week unemployment in the US on Friday surged to a new 26-year high of 9.8 percent and stimulus spending is likely to remain in place until global recovery is confirmed.

US Treasury Secretary Timothy Geithner said the US economy had "improved dramatically" but that "conditions for a sustained recovery, led by private demand, are not yet fully established".

However,the exclusive G7 group could be under threat as the group of emerging economies - consisting of the largest economies including China, India, Russia and Brazil - appears to have replaced it over the past year.

The G20 leaders said after their meeting in Pittsburgh last month that it will become the world's "premier" decision-making forum.

It remains to be seen as to whether the US, and the rest of the West, has come to the end of its time as the dominant force in global economics.

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