CHENGDU, CHINA – World Bank President Jim Yong Kim said continued uncertainty following the U.K.’s vote to leave the European Union could hurt global growth.
“We actually thought the U.S. was solid, the eurozone seemed to be getting better, even Japan seemed to be doing a little bit better,” Kim said Sunday on the sidelines of the Group of 20 finance ministers and central bankers meeting in Chengdu, southwest China. “Brexit was a big hit, and we’re still trying to understand exactly what the implications are, but it looks like global growth will be disappointing again.”
Even before Brexit, the World Bank in June cut its outlook for global growth to 2.4 percent from 2.9 percent seen in January as business spending sags in advanced economies and commodity exporters in emerging markets struggle to adjust to low prices. In April, Kim cautioned that the global economy can’t cope well with more uncertainty.
Before heading to Chengdu for the summit, Kim met with Chinese Premier Li Keqiang and the heads of global organizations in Beijing to discuss economic growth, trade and finance. In a joint study released Friday with the Chinese government and World Health Organization, the lender urged a series of structural changes to China’s current health care system to save as much as 3 percent of gross domestic product.
At the Beijing gathering, Kim fretted about a very loud rejection of globalization in the West. While more and freer trade has raised many people out of poverty, the middle class in high income countries has seen incomes decline, Kim said.
“People who went through their lives, did the right thing, worked in factories, were making a good income, now find themselves out of a job and unable to compete for the high-tech jobs that in fact are available,” Kim said.
Governments should do more to improve the health, education and skills of their people, Kim said, adding that the bank’s job is to convince global leaders to “create a world that’s growing, but growing in a way that’s inclusive of everyone.”
International Monetary Fund Managing Director Christine Lagarde also said more must be done to share the benefits of growth and economic openness broadly among countries, and cited the impact of the U.K. vote.
“We met at a time of political uncertainty from the Brexit vote, and continued financial market volatility,” Lagarde said in a statement after the two-day meeting. “Lackluster growth of the post-crisis era continues, with weak demand in advanced economies and difficult transitions to a self-sustained growth model in many emerging markets.”
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