Uncertainty from trade tensions and slowing global growth is increasing the need for developing countries to pursue reforms that make them more attractive to private investment, World Bank President David Malpass said on Friday.
Malpass, who is attending the G20 leaders summit in Osaka Japan, told Reuters in an interview that he will urge countries to take bolder steps to improve their business climates to allow private firms to compete better with state-owned companies and generate more profitable growth, innovation and jobs.
The World Bank in its annual Global Economic Prospects report earlier this month forecast that slowing trade and investment flows would cut global growth this year to 2.6 percent, down 0.3 percentage point from previous forecasts.
The International Monetary Fund has forecast a similar slowdown, driven primarily by increased tariffs, primarily between the United States and China.
“My message to people at the G20 is the idea that development is critical in this environment and urgent. It’s important that policy changes be considered that will create more potential for private-sector growth,” Malpass said in a telephone interview from Osaka.
Malpass, who took over as World Bank president in April after two years in the Trump administration as the U.S. Treasury’s top diplomat, said he is also focused on countries’ internal development and ways to grow internal commerce between cities and regions.
The bank’s private-sector arm, the International Finance Corp, is doing a deep diagnostics dive into obstacles to private-sector firms in various countries on issues like customs facilitation, stronger bankruptcy regimes and legal changes to bring more women into workforces.
Malpass declined to comment when asked whether he was urging his former colleagues in the Trump administration to reach a trade deal with China to avoid new tariffs as US President Donald Trump and Chinese President Xi Jinping prepared to meet in Osaka. Malpass in the past year had been at the negotiating table in several rounds of the US-China talks.
“We’re keeping an eye on it,” Malpass said of the U.S.-China trade dispute. “It’s critical that countries retain investor confidence given the uncertainties.”
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Malpass, who has criticized China’s Belt and Road infrastructure drive in the past over a lack of transparency in its lending practices, said that the wind-down of the World Bank’s lending to China and other middle-income countries was continuing in line with agreements reached last year as part of a $13 billion capital increase.
During a meeting in Beijing earlier this month, Malpass said he discussed with Chinese officials the shifting of World Bank lending to tackle environmental problems such as air pollution and eliminating plastics waste from rivers and oceans.
“We’re evolving the relationship in a way that as lending comes down, more of it goes toward environment and poverty alleviation kinds of activities,” Malpass said.
Malpass said he also would be meeting with the leaders of several developing countries, including Brazil, India, Indonesia, Russia, Saudi Arabia, Senegal, South Africa and Turkey during the G20 summit.