US economic power 'is declining'

US economic power is declining as a result of the financial crisis, the head of the World Bank has said.

"One of the legacies of this crisis may be a recognition of changed economic power relations," said World Bank president Robert Zoellick.

The US, the world's biggest economy, has been in recession for almost two years, while emerging economies like China and Brazil have grown.

This may help bring about a long-term rebalancing of the world economy.

'Changed relations'

"A multi-polar economy less reliant on the US consumer will be a more stable world economy," Mr Zoellick said.

He was 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.

For example, China recently got a permanent chair on the IMF's 24-seat policy-making committee.

G7 or G20?

Finance ministers from the Group of Seven (G7) richest nations - the US, Japan, Germany, UK, France, Canada and Italy - have also been meeting in Istanbul.

The G7 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."

Unemployment in the US on Friday surged to a new 26-year high of 9.8%.

G7 finance ministers agreed to keep stimulus spending in place "until recovery is assured".

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".

Mr Geithner also said the world is recovering "sooner and stronger" than expected.

Questions have also been raised about the future of the G7.

The Group of 20 - 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.