Today, roughly 700 million people live in extreme poverty, a reduction of more than 1 billion people than 15 years ago. But the weakening global economy threatens our progress toward ending extreme poverty by 2030 said World Bank Group President Jim Yong Kim in his opening press conference at the recent World Bank-IMF Spring Meetings 2016, held in the US capital.
Pointing to a dismal global economy, Mr. Kim said, “There are not many bright spots around the world — the United States is one among the developed economies and India is another among the middle-income countries. Growth remains weak in Europe and Japan, and among emerging economies, Russia and Brazil are projected to post negative growth once again. We have just downgraded our global growth economic forecast this year to 2.5 percent from 2.9 percent.
As they gathered for the latest round of talks, finance ministers of the world’s top economies came under growing pressure to do more for global growth and to crack down on tax evasion. The G20 though will also have to answer to the broad worries voiced by the World Bank and IMF that world growth could slow to ‘stall speed’ if nothing is done.
In April, the International Monetary Fund (IMF) cut its 2016 global growth forecast for the fourth time in a year, to 3.2 percent from 3.4 percent, amid weakening global demand and geopolitical risks. A fifth straight global growth mark down by the IMF looks almost certain.
The World Trade Organization expects 2016 to be the fifth consecutive year of less than 3 percent growth in global trade, and Director-General Roberto Azevedo said trade would remain sluggish going into the third quarter of the year.
The two powerful institutions said demand for financial support from struggling governments has risen to levels normally seen during crises. “In the global economy, there are not many bright spots,” said World Bank President Jim Yong Kim. “The weakening global economy threatens our progress toward ending extreme poverty by 2030.”
China's trade minister Gao Hucheng speaking at the start of a two-day meeting of trade ministers from G20 economies in Shanghai last week, said the global economic situation is grim and major economies must lead the way in tackling problems including sluggish growth and weak trade. Uncertainty hangs over the outlook for a slow-growing global economy now beset by post-Brexit reverberations. “Global trade is dithering, international investment has yet to recover to levels before the financial crisis, the global economy has yet to find the propulsion for strong and sustainable growth," he said.
Meanwhile, the emerging economies of the G24 group said that things have not improved for them. “We continue to face weaker global demand, tighter financial conditions, more volatile capital flows, and heightened security challenges. These headwinds could further weaken our growth outlook and contribution to global growth,” the group said.
G20 ministers also faced calls to take action to boost job-creating investment and fight off rising protectionist sentiment. In addition, they were confronted with an ambitious proposal from Europe’s top five economies in reaction to the Panama Papers scandal that has exposed the extent of banking secrecy worldwide.
Germany, Britain, France, Spain and Italy released a proposal calling for an international registry of the beneficial owners of anonymous shell companies to help fight tax evasion and money laundering. The move was a reaction to the leak of millions of documents on anonymously owned shell companies from Mossack Fonseca, a Panamanian law firm that specialized in setting up such firms.
“The current events show that identifying the ultimate beneficial owner behind corporate structures is key to fighting tax evasion, money laundering and illicit finance effectively,” German Finance Minister Wolfgang Schaeuble said in a news conference.
However, this could put the countries of the elite group at odds among themselves: some, including the United States, allow company owners to hide their identities in anonymous companies and trusts.