Wed, Oct 09, 2019 - Page 10 News List

World Bank joins warning about weak global growth


World Bank Group president David Malpass speaks at a news conference at the chancellery in Berlin on Oct. 1.

Photo: EPA-EFE

World Bank Group president David Malpass on Monday said the global economic outlook is deteriorating amid Brexit-related uncertainty, trade tensions and a downturn in Europe.

“Global growth is slowing,” Malpass said in Montreal in a speech ahead of the the IMF and World Bank annual meetings.

The world economy now looks even weaker than the bank’s June forecast for 2.6 percent growth this year, “hurt by Brexit, Europe’s recession and trade uncertainty,” he added.

Malpass renewed his global growth warning as investors are keeping an eye on several major issues that could come to a head this month.

High-level US-China trade talks resume this week — before the next planned tariff escalation on Tuesday next week — and British Prime Minister Boris Johnson has pledged to take the UK out of the EU on Oct. 31 without a deal if necessary.

Meanwhile, economic indicators from Europe are flashing red as a slump in manufacturing increasingly affects domestic demand.

Malpass repeated his criticism of the roughly US$15 trillion of bonds with zero or negative yields, describing it as “frozen capital” that is diverting resources from growth, and benefiting bondholders and issuers of the debt.

The heads of the global institutions are gathering amid growing concern about how threats from US President Donald Trump’s trade disputes to Brexit are weighing on world expansion.

There are also fresh faces in place after IMF managing director Christine Lagarde left to lead the European Central Bank and was succeeded by Bulgarian economist Kristalina Georgieva, formerly chief executive of the World Bank.

The IMF has also said it might lower its outlook for this year after it in July projected 3.2 percent growth — the lowest since the global financial crisis.

The IMF is preparing to release its updated forecast next week.

Trump nominated Malpass in February, choosing a supporter who had criticized China and backed a shakeup of the global economic order.

Malpass, who previously portrayed the lender as inefficient and reluctant to cut funding for developing countries that grow into dynamic emerging markets, was selected in April to serve a five-year term.

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