World Bank chief economist Carmen Reinhart earlier this week said that the COVID-19 pandemic is turning into a major economic crisis and warned of the possibility of a financial crisis emerging.
“This did not start as a financial crisis, but it is morphing into a major economic crisis, with very serious financial consequences,” Reinhart said. “There’s a long road ahead.”
Reinhart, who took her new role in June, is best known for her work with Kenneth Rogoff, a professor at Harvard University, on the last financial crisis in their 2009 book This Time Is Different: Eight Centuries of Financial Folly.
Photo: EPA-EFE
It made the pair the go-to resource on the history of government defaults, recessions, bank runs, currency sell-offs, and inflationary spikes.
Asked whether central banks buying bonds to keep yields low is ultimately a zero-sum game when everyone is doing it, Reinhart said: “This is a war. During wars governments finance their war expenditures however they can, and right now there are dire needs.”
“The scenario we are in is not a sustainable one,” she added.
Reinhart made the remarks after the world’s richest nations agreed to renew a debt relief initiative for the poorest countries through at least the first half of next year, falling short of the World Bank’s call for a full-year extension.
China is owed almost 60 percent of the money that the world’s poorest nations would be due to repay this year, World Bank data showed.
It has made many loans to developing countries with terms that are not transparent and at higher interest rates than the nations can afford, World Bank president David Malpass said in August.
Asked about China not participating in the debt relief initiative, Reinhart said that Beijing was in fact involved, just “less than fully.”
The China Development Bank, a major lender, has not joined the effort, nor have private sector creditors, she said.
“Full participation is something we should strive for but unfortunately haven’t yet seen,” Reinhart added.
Cairo’s new monorail slices across the city skyline, running above the familiar chaos of blaring horns and aging buses’ exhaust fumes that mark rush hour below. The US$4.5 billion monorail, opened this month, is among Egypt’s most prominent new transport projects, part of a debt-funded infrastructure drive criticized for sapping state finances while bringing limited benefits to most of the country’s 109 million people. “It feels like you’re in a different country,” said Ramy Sayed, a restaurant manager, aboard a driverless Innovia 300 train. “No noise, no traffic, we’re not used to this.” The eastern line runs 56km from the bustling middle-class
Starlux Airlines Co (星宇航空) today unveiled a long-haul network expansion plan at a shareholders’ meeting in Taipei, including direct flights to Barcelona, Spain, and Zurich, Switzerland, as well as a service connecting Taipei, Sydney and New Zealand. Starlux is to become the first Taiwanese carrier to offer non-stop services to the two European cities, while the inaugural oceanic route is expected to expand transit opportunities within the Australia-New Zealand market, Starlux said. Flight services to Chicago, Dallas, Washington and New York are under evaluation, the airline added. Prior to the shareholders’ meeting, the airline earlier this year announced that it would be
Taiwanese firms have increased investment in the Philippines in recent years as Manila’s ties with Washington deepen and global supply chains continue to shift away from China, an expert at the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. The Philippines had not been among Taiwanese investors’ top choices in Southeast Asia, CIER Taiwan ASEAN Studies Center director Kristy Hsu (徐遵慈) said at a seminar in Taipei. However, Taiwan’s investment in the country has grown significantly since the COVID-19 pandemic, reaching US $257 million last year, a high in recent years, she said. Although Taiwan’s total investment in the Philippines still lags
Taiwanese prosecutors suspect that three people successfully smuggled at least one shipment of Nvidia Corp artificial intelligence (AI) chips to China after first exporting them to Japan, people familiar with the matter said. The trio was detained last week by the Keelung District Prosecutors’ Office for allegedly falsifying documents related to exports of Super Micro Computer Inc servers containing advanced Nvidia chips, which the US has barred from sale to China without a license from Washington. The move marked Taiwan’s first public crackdown on AI chip diversion after years of pressure from the US to take a more active role in curtailing
RSS