The World Bank’s chief economist yesterday urged countries not to abandon their stimulus policies, citing the risk of a second dip in the global economy.
Justin Yifu Lin (林毅夫), a senior vice president at the bank, said the global economy was showing signs of recovery but there remained a “lot of uncertainties.”
“Yes, we have a recovery, but the foundation for recovery is still quite weak,” Lin told journalists on the sidelines of Global Korea 2010, an annual international forum in Seoul.
He said one of the main challenges the world faces is excessive production capacity, which raises the risk of a double dip.
“To avoid that, [countries need] to maintain fiscal stimulus,” he said.
“We can turn this crisis into an opportunity to promote long-term, sustainable growth ... for that, it’s very important for governments to use stimulus funds in areas like green economy and infrastructure,” Lin said.
He said this type of stimulus, “in the short run, may accumulate public debts, but in the long run you will have more long-term higher growth, government revenues will increase and debts will be serviced.”
Kenneth Rogoff, a Harvard University economics professor and former IMF chief economist, called for global uniform standards for regulating capital markets in order to avoid another financial crisis.
“At least international money banks that have a large presence around the world will probably need much more uniform capital standards, more regulations,” he said.
Rogoff also warned that China’s economic growth will plunge to as low as 2 percent following the collapse of a “debt-fueled bubble” within 10 years, sparking a regional recession.
“You’re not going to go a decade without having a bump in the business cycle,” Rogoff said in an interview in Tokyo on Tuesday.
“We would learn just how important China is when that happens. It would cause a recession everywhere surrounding” the country, including Japan and South Korea, and be “horrible” for Latin American commodity exporters, Rogoff said.
China, expected to surpass Japan as the second-largest economy this year, has helped pull the world out of its deepest postwar slump. Record lending, soaring property values and accelerating economic growth prompted the government to begin retracting stimulus measures implemented during the global recession.
“Their response to the latest financial crisis clearly raised the risk that they have a debt-fueled bubble in the economy,” said Rogoff, who in 2008 predicted the failure of big US banks.
While Rogoff said he was not sure what would cause China’s bubble to pop, he said land was “the best bet” as it is “the most common source” of crises.
RETHINK? The defense ministry and Navy Command Headquarters could take over the indigenous submarine project and change its production timeline, a source said Admiral Huang Shu-kuang’s (黃曙光) resignation as head of the Indigenous Submarine Program and as a member of the National Security Council could affect the production of submarines, a source said yesterday. Huang in a statement last night said he had decided to resign due to national security concerns while expressing the hope that it would put a stop to political wrangling that only undermines the advancement of the nation’s defense capabilities. Taiwan People’s Party Legislator Vivian Huang (黃珊珊) yesterday said that the admiral, her older brother, felt it was time for him to step down and that he had completed what he
Taiwan has experienced its most significant improvement in the QS World University Rankings by Subject, data provided on Sunday by international higher education analyst Quacquarelli Symonds (QS) showed. Compared with last year’s edition of the rankings, which measure academic excellence and influence, Taiwanese universities made great improvements in the H Index metric, which evaluates research productivity and its impact, with a notable 30 percent increase overall, QS said. Taiwanese universities also made notable progress in the Citations per Paper metric, which measures the impact of research, achieving a 13 percent increase. Taiwanese universities gained 10 percent in Academic Reputation, but declined 18 percent
CHINA REACTS: The patrol and reconnaissance plane ‘transited the Taiwan Strait in international airspace,’ the 7th Fleet said, while Taipei said it saw nothing unusual The US 7th Fleet yesterday said that a US Navy P-8A Poseidon flew through the Taiwan Strait, a day after US and Chinese defense heads held their first talks since November 2022 in an effort to reduce regional tensions. The patrol and reconnaissance plane “transited the Taiwan Strait in international airspace,” the 7th Fleet said in a news release. “By operating within the Taiwan Strait in accordance with international law, the United States upholds the navigational rights and freedoms of all nations.” In a separate statement, the Ministry of National Defense said that it monitored nearby waters and airspace as the aircraft
UNDER DISCUSSION: The combatant command would integrate fast attack boat and anti-ship missile groups to defend waters closest to the coastline, a source said The military could establish a new combatant command as early as 2026, which would be tasked with defending Taiwan’s territorial waters 24 nautical miles (44.4km) from the nation’s coastline, a source familiar with the matter said yesterday. The new command, which would fall under the Naval Command Headquarters, would be led by a vice admiral and integrate existing fast attack boat and anti-ship missile groups, along with the Naval Maritime Surveillance and Reconnaissance Command, said the source, who asked to remain anonymous. It could be launched by 2026, but details are being discussed and no final timetable has been announced, the source