Ayhan Kose, Chief Economist at the World Bank
Lecture at the G20 (Group of 20) Global Economy and Financial Stability Conference
Aihan Kose, Deputy Chief Economist of the World Bank, is giving a presentation at the "2024 Global Economy and Financial Stability Conference" held on the 4th at the Plaza Hotel in Jung-gu, Seoul. Photo by Jinhyung Kang aymsdream@
The World Bank (WB) has projected that the global economy will avoid a recession and achieve a soft landing. However, it pointed out that growth will slow down and the issue of rising debt in emerging markets is an urgent challenge that needs to be addressed.
Ayhan Kose, Chief Economist and Director of Development Prospects at the World Bank, stated at the '2024 G20 Global Economy and Financial Stability Conference' held at the Plaza Hotel in Seoul on the 4th, "Although there are concerns about a recession as the international monetary policy enters a easing (interest rate cut) cycle, we expect the global economy to achieve a soft landing."
During his lecture titled "Debt challenges under the shadow of elevated Real interest rates," Kose forecasted, "This year, advanced economies will grow by about 2%, and emerging markets by about 4%. However, growth is expected to slow somewhat next year."
He added, "Since the pandemic, the global economic growth trend has been stabilizing downward, and this trend is expected to continue for some time. There are some concerns about the U.S. labor market, but we need to observe how the situation unfolds."
He also predicted that the disinflation (decline in inflation rate) trend will continue. Kose said, "The global average inflation is expected to be 2.5% this year," and "In the long term, inflation will stabilize and return to pre-pandemic levels."
He continued, "Interest rates will fall to about 3%," noting, "Before the pandemic, they were around 1.5%, but we expect interest rates to remain higher than that level."
Kose expressed concern that high interest rates will exacerbate debt problems in emerging markets. Recently, debt has been rapidly increasing mainly in emerging markets rather than advanced economies, with the pace and scale of increase faster and larger than in the past.
He diagnosed, "Currently, 75% of emerging markets are facing debt problems," adding, "In 2012, it was about 12%, but the problem has rapidly grown." He emphasized, "These countries find it difficult to issue foreign debt and have limited market access, making it hard to return to pre-pandemic economic levels and they need assistance."
He urged, "The international community needs to face the debt problems of emerging markets," and argued, "Practical and proactive solutions such as debt relief and liquidity support must be introduced."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
