Banga Warns of Economic Uncertainty and Sluggish Growth

• Banga warns of economic uncertainty and slow growth
• Calls for urgent economic dialogue
• Employment to take center stage at key meetings

World Bank President Ajay Banga has issued a warning about global economic slowdown driven by uncertainty and volatility stemming from the ongoing trade war, which he says will “undoubtedly” result in slower growth in the coming months.

In an official statement, Banga urged governments to reach agreements quickly:

“History shows that more open economies tend to grow faster and withstand reserve fluctuations and crises better. Countries must focus on negotiation and dialogue. It’s crucial at this stage—and the sooner we do it, the better,” he said during a virtual press conference.

Banga’s remarks come days ahead of the World Bank and International Monetary Fund (IMF) Spring Meetings in Washington, scheduled for next week, amid persistent tensions over US-imposed tariffs.

Banga Highlights the Impact of Tariffs on Developing Economies

While a partial truce on tariffs has been achieved, China remains unresolved.

Banga pointed out that many developing economies still maintain higher tariff levels than advanced economies, which increases their risk of losing competitiveness.

He emphasized that export-dependent countries—especially those reliant on commodities or manufactured goods—are particularly vulnerable to trade disruptions caused by tariffs.

Though the full economic impact remains unclear, both the World Bank and the IMF are drawing on their “toolkits” and past experiences—such as during the COVID-19 pandemic—to help bolster domestic productivity and international trade in emerging markets.

Employment will be a central focus during the April 21–26 meetings in Washington. Banga stressed that jobs are essential for national progress.

The role of private capital will also be on the table. According to Banga, private investment has often been sidelined due to regulatory uncertainty, currency risks, and political instability, which have discouraged investors.

“Too often, regulatory uncertainty, exchange rate risk, and political instability have kept investors on the sidelines. That’s why we’re trying a different approach,” he explained.

The World Bank is currently working with institutional investors such as Standard & Poor’s, BlackRock, and various pension funds to develop standardized loan packages aimed at unlocking capital from sovereign wealth and pension funds.

Banga warned that the loss of predictability leads to “paralysis” in markets.

Trump Administration’s Position Adds to Economic Uncertainty
Economic uncertainty is further compounded by the stance of the Trump administration, which has questioned multilateralism and is reassessing the U.S. role in global organizations. Banga acknowledged that this represents a “real” concern for the World Bank but expressed cautious optimism about ongoing dialogue with governments.

“I like to think about optimizing the use of funds by working with each government to determine whether they will continue contributing. I don’t know what will happen, but I have no issue with the dialogue we’re having. They’re asking the right questions, and we’re trying to provide the right answers,” Banga concluded.

YOU MAY ALSO BE INTERESTED IN: SNAP Benefits Increase Confirmed for April 2025

SOURCE: EFE