World Bank President David Malpass said on Tuesday (25.02.2020) that global economic growth in the first half of 2020 will likely fall short of the 2.5% pace forecast for the full year.
«The good news is that it was slightly higher than the growth rate in 2019, but the bad news is that, on the one hand, the first half will probably be slower given the coronavirus."Malpass said today at a meeting of economists in Washington. "But also, even with 2.5% real growth for the world, that's just not enough growth to really lift developing countries up."
«Coronavirus is the number 1 topic at the bank«, Malpass said at the National Association for Business Economics conference. “We are looking at ways to respond or make resources available to developing countries,” he said.We are also coordinating very closely with the WHO, the World Health Organization, which is on the front lines of the virus, and we have a range of tools that the bank can use as the pandemic spreads.”
Malpass He also highlighted European growth as notable for its weakness., noting that the slowness is of particular concern for Africa because its growth capacity is closely tied to the pace of expansion in Europe. He also said that the European Central Bank's policy does not work because it distorts markets and subsidizes the least productive parts of the economy.
ECB Policy
«Europe's slow growth comes at a time when mainstream economics views ECB policies as massively sham-like», he said, citing the expansion of the central bank's balance sheet. He said that while slow growth could be interpreted as evidence that stimulus has not been enough, he prefers to interpret the result as a sign that policy has not actually been stimulative.
«The ECB's balance sheet has expanded many times over the past few years, but there is no longer a direct connection to the growth of private sector bank lending.“o,” he said. “Much of the short-term capital supply in Europe is absorbed by the central bank to buy and hold long-term government bonds. The result is a central bank policy that does not provide monetary stimulus.
In projections released early last month before the coronavirus began to spread widely, the World Bank said global economic growth is likely to pick up slowly this year and next. The expansion will accelerate marginally to 2.5% this year from 2.4% in 2019, the banker said in its latest World Economic Outlook report.
International Monetary Fund Managing Director Kristalina Georgieva told the Group of 20 officials meeting in Saudi Arabia last weekend that the outbreak had prompted the fund to cut 0.1 percentage point from its global growth forecast, but that it is also looking at “more dire” scenarios.
Source: Bloomberg
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