The World Bank has called on leaders of the major economies to use this week’s meetings to take action to prevent a cocktail of trade tensions, climate change and conflict from derailing its goals of eliminating extreme poverty and reducing inequality.
Kristalina Georgieva, the Bank’s chief executive, said she was fearful of the potential impact on smaller, emerging economies of the hikes in tariffs between the United States and China.
“What is emerging as a more serious concern is if there is an erosion of investor and consumer confidence,” she told GlobalMarkets. “If investors are to more massively delay investments because of uncertainty and if consumers delay purchases… then there could be a more significant slowdown for global growth.”
Bank president Jim Yong Kim echoed this yesterday, saying countries in China's supply chain could be hurt: "We are working with every single one of our countries in case it gets worse."
Georgieva said the Bank would bring a report to the Bali meetings that showed “remarkable progress”, with a fall in the rate of poverty from 36% of the world population 25 years ago to less than 10% now. “We have 1.1bn fewer poor people, while the population has increased by 2bn,” she said. “But we also know that poverty is concentrated in sub-Saharan Africa and conflict-affected countries. The very simple message is that we will win or lose the fight against poverty in Africa.”
Kim has set a challenging target to cut the number of people living on less than $1.25 a day to 3% globally by 2030.
“We remain convinced that it is possible to reach the 3% goal, but we are very concerned that reaching this goal will require more of the attention and focus of the world, especially in terms of conflict prevention and conflict resolution, so we can get there,” Georgieva said.
“We will do our utmost to reach this goal. We believe it is within our reach, but we also know it would be a tall mountain to climb. We need collective action on many fronts.”
The World Bank is likely to use the meetings to push forward on its agenda on Africa and on fragile and conflict-afflicted states in particular. Over the last year it has doubled funding for fragile states from $7bn to $14bn, opened a financing window of $2bn to support countries hosting refugees, and channelled $2.5bn of private sector financing for fragile states via the Bank’s International Finance Corp and Multilateral Investment Guarantee Agency arms.
Asked whether the Bank risked losing to China its role as primary provider of development investment, Georgieva insisted Beijing was “eager” to work with the Bank. “The more difficult the environment, the better the position for co-operation. If you are in a place where bullets are flying, people stick together and organisations will co-operate.”