World Bank President David Malpass warned Wednesday of immediate challenges confronting the developing world, citing a distressing mix of factors ranging from higher food and energy prices to rising interest rates, inflation, currency depreciation and capital outflows.
“A tough reality confronts the global economy – and especially the developing world,” Malpass said. “A series of harsh events and unprecedented macroeconomic policies are combining to throw development into crisis.”
Speaking at the Stanford Institute for Economic Policy Research (SIEPR), Malpass explained how the global economic landscape in the wake of COVID-19 — along with many monetary and fiscal policies underway in advanced countries — pose a risk to developing countries that will persist beyond 2023. If those policy trends become the “new normal,” he said, it will prolong the under-investment in development and hamper future growth.
His remarks come two weeks ahead of the highly anticipated annual meetings of the World Bank Group and the International Monetary Fund in Washington, D.C., where both organizations are expected to address the world’s economic challenges.
Malpass came under fire a week earlier after he failed to acknowledge that the use of fossil fuels is warming the planet. He has since publicly clarified his position, rebutting remarks from former vice president Al Gore who called him a “climate denier.”
Speaking at the event co-hosted by SIEPR and the Stanford King Center on Global Development, Malpass reiterated his stance on climate change in a Q&A moderated by Katherine Casey, a senior fellow at SIEPR, a faculty affiliate at the King Center, and an associate professor of political economy at the Stanford Graduate School of Business.
“I’m not a climate denier,” he said. “It’s clear greenhouse emissions cause global warming.”
And he outlined the World Bank’s work to combat climate change: It is the largest single funder of climate-related finance in the developing world and a leader on climate diagnostics, methane emission reduction, and climate financing innovations, he said.
The event was livestreamed and attended in person by business leaders and Stanford faculty and students.
Malpass noted how global economic “shockwaves” are hitting at a time when developing countries are already struggling with governance issues, debt, and climate adaptation. To make matters worse, the growing problem of inequality and access to education only worsened with the pandemic.
“Weathering this perfect storm and undoing the recent reversals in development require new macro- and micro-economic pathways in both advanced and developing countries,” he said.
“The urgency is clear in daily news reports of inflation, climate change, famine, civil protests, and violence.”
But he ended the event on an optimistic note, telling the academics in the audience that their scholarship can impact policy.
“Don’t get negative on the global system,” he said. “Just try to make it work better.”