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Global economy at risk if Middle East conflict expands, says World Bank's Ayhan Kose
While the global economy shows signs of growth and decreasing inflation, the near future involves risks, including the escalation in the Middle East impacting oil prices, strained China-US relations, and an increasingly challenging tariff and trade environment, said Ayhan Kose, World Bank Deputy Chief Economist. He discussed the geopolitical tensions influencing the global economy with GZERO's Tony Maciulis at the IMF and World Bank Annual Meetings in Washington, DC, in a GZERO Global Stage interview. Kose also addressed the other major economic gathering happening this week: Russia’s 16th annual BRICS Summit in Kazan, Russia, largely seen as a counterweight to Western-led order. While acknowledging the widening economic and geopolitical divide, Kose emphasized the need for international cooperation. He expressed concern about “the increase in the number of protectionist measures and consequences of that for global trade.” Kose also emphasized the "urgent and important" need for World Bank member nations to continue to support development in poorer countries, a more difficult conversation today as many face their own economic headwinds and the world awaits the results of the 2024 US presidential election.
World Bank economist: The poorest are getting poorer globally
It’s a staggering statistic and a marked setback from the years before the COVID-19 pandemic—the world’s poorest countries are falling further behind, and the wealth gap between the least and most developed nations is growing. One in three of these countries is poorer today than in 2019.
Ayhan Kose, World Bank Group’s Deputy Chief Economist, said that the combined shocks of multiple crises, including the pandemic, wars in Ukraine and the Middle East, food insecurity, and inflation, have taken a massive toll on the 75 least developed economies.
Kose spoke to GZERO’s Tony Maciulis as the annual Spring Meetings of the World Bank and the International Monetary Fund were underway this week in Washington, DC.
“When the food price goes up, the price of oil goes up. That has significant implications for these economies,” he told GZERO. “Where we are now, when you look at 2020-24, they registered the weakest growth rate on average since the 1990s.”
In many ways, the global economic outlook presented this week tells a tale of two post-pandemic realities. Kose explained that the most developed nations, particularly the US, showed greater resilience than expected early in 2023, and the threat of recession has been kept at bay. However, the negative impacts on poor countries, many of which are in Sub-Saharan Africa, cannot be ignored and could lead to greater geopolitical risk and humanitarian emergencies.
This week, World Bank leaders are calling for a renewed commitment to the International Development Association (IDA), which provides zero-interest loans and grants to nations most in need. Kose said the risk associated with crippling sovereign debt has caused some private sector funding to dry up and that politics and protectionism are impacting how wealthier nations approach funding.
But he also pointed to enormous opportunity in nations that are IDA-funded, including a younger population that could serve as a future global workforce and rich natural resources.
With proper investment and funding, he explained, other developing countries have been lifted to find sustained growth.
“At the end of the day history is full of examples. China, India, Indonesia, Chile, (South) Korea. They all used to be IDA borrowers. They were poorer countries. They became much richer.”
For more of our 2024 IMF/World Bank Spring Meetings coverage, visit Glogal Stage.
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World faces "lost decade" of economic growth, says World Bank economist
The World Bank predicts that the global economy now faces a decade of lost growth, in part due to an older workforce and lower productivity. Is the way out of the looming doldrums to have a young population like Nigeria?
Yes, but those countries will need help from wealthy nations to invest in things like education to reap the benefits of their demographic divided, World Bank deputy chief economist Ayhan Kose tells GZERO's Tony Maciulis at the World Bank/IMF spring meetings in Washington, DC.
Meanwhile, the lender also wants developed countries to focus on its priority No. 1: climate. And there's always reforming the institution itself.
Kose explains why he thinks the World Bank can accomplish both goals, his take on whether artificial intelligence will deepen global inequality, and if believes a global recession is inevitable.
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Is the world on the brink of another global recession?
The global economy's 2023 outlook is ... bleak. Why? Ayhan Kose, the World Bank’s chief economist for Equitable Growth, Finance, and Institutions, says that unlike the 2009 and 2020 global recessions, next year's likely slowdown in economic activity — coupled with growing inflation — could be more like the one of 1982, which also came with a string of debt crises.
And with growing food insecurity and climate change challenges ahead, for emerging markets and low-income countries, “things are going to get worse before they get better,” Kose says. “That’s why the global community has to show willingness, consensus, and at the same time, financing, to address these problems.”
Kose spoke with Shari Friedman, Eurasia Group's Managing Director, Climate and Sustainability in a Global Stage interview on site at the World Bank/IMF fall meetings in Washington, DC.
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