- Group of 20 finance chiefs to meet amid unstable markets
- ``Unorthodox'' policy measures failing to boost global economy
The sluggish global economy has entered “unprecedented territory” as countries grapple with divergent difficulties, leaving little room for a coordinated policy response from the Group of 20 finance chiefs meeting this week, World Bank President Jim Yong Kim said in an interview.
“There is a lot of uncertainty; there is a lot of instability and fluctuations in global markets,” he said. “But I don’t think we’re at a point where you are going to see some sort of concerted, focused action in one sector or another.”
Global growth continues to lag even as advanced economies embrace “unorthodox” policies, Kim said. “We are now seeing negative interest rates in Japan, negative interest rates in Europe and even in the United States, although they are not negative, the notion that that might be possible has been put on the table, so this is completely unprecedented territory."
The Washington-based development bank lowered its global forecast for 2016 growth to 2.9 percent, from a 3.3 percent projection in June, according to a report it released last month. The world economy advanced 2.4 percent last year, lower than the 2.8 percent growth forecast.
China’s hosting of the G-20 forum this year in Shanghai culminates in a leaders’ summit in September, and officials are pushing a detailed and diverse platform that covers everything from bolstering investment in infrastructure to climate-friendly financing.
The weakening outlook for global growth and how policy makers should respond will dominate the agenda when the G-20 central bank governors and finance ministers gather. China faces calls to make its currency and macroeconomic policies clearer at the meeting.
The economic woes afflicting individual countries are so varied that it’s unlikely a consensus on a policy response will be reached, Kim said.
The G-20 provides “an environment in which we can put difficult issues on the table and talk them through,” he said. “But it’s difficult to imagine that everyone would take a particular action around fiscal, monetary or other kinds of policies because you have oil producers and oil importers, you have commodity exporters and commodity importers -- there’s such a difference in economic models.”
Emerging markets such as Vietnam face long-term economic challenges to reach upper-middle-income status, said Kim, who was in Hanoi to present the World Bank’s report on the Southeast Asian country’s outlook through 2035.
Beyond dealing with economic pressures the country faces from the global economic slowdown, Vietnam’s leaders need to aggressively reform its state-owned enterprises, boost the private sector by providing capital to businesses based on market principles and develop a more sophisticated workforce for the digital age, he said.