Tag Archives: developing nations

World Bank Bracing for US Rise in Interest Rates

Economy, Emerging Markets, , ,

US interest rates, which have been hovering near zero for about 6 years, are expected to rise as the US economy continues its slow but steady recovery. The World Bank is closely watching what the US Federal Reserve will do, and when, and is expecting when that day finally does arrive, developing economies might be in for some hard times.

The hike in interest rates could come as early as this Thursday, when the Fed winds up a policy meeting. In a report issued by the World Bank they warn that such a rise could have a modest impact on developing countries, but also adds that there is a chance that the fall-out could be worse.

The World Bank has several reasons for their concern. They believe that a rise in interest rates could interfere with capital flows into developing countries, which can lead to stifling of economic growth, which could then lead to financial instability.

Despite their warning, they also site several reasons to be optimistic. First of all, any increase in interest rates will happen gradually, allowing developing economies to cope more easily with any changes. They also point out that any changes in rates will happen within the context of a strong, growing US economy, which usually bodes well for the global economy in general.

World Bank Aims to End World Poverty

Economy, , , , ,
World Bank President Jim Yong Kim
World Bank President Jim Yong Kim

Officials of international finance are solidly behind the new goal of the World Bank to put an end to extreme global poverty by the year 2030. The leaders emphasized that the focus of the World Bank should be making sure that the world’s most impoverished populations will reap the benefits from strong growth and improving affluence in the developing nations of the world.

“For the first time in history we have committed to setting a target to end poverty,” World Bank President Jim Yong Kim said on Saturday. He made his statement after a meeting of the World Bank’s Development Committee. “We are no longer dreaming of a world free of poverty; we have set an expiration date for extreme poverty,” he added.

The World Bank set the goal to reduce extreme poverty down to only 3 percent throughout the world. This will be accomplished by targeting the most impoverished 40 percent of people now living in each country of the developing world. Currently the economies of developing countries are growing at an annual rate of 6 percent on average. Millions of people are being removed from the ranks of the extreme poor and an expanding middle class is also creating growth of economic inequality.

“We recognize that sustained economic growth needs a reduction in inequality. Investments that create opportunities for all citizens and promote gender equality are an important end in their own right, as well we being integral to creating prosperity,” the Development Committee said.

Statistics reveal that global poverty has been reduced substantially over the past 25 years. In 1990 the percentage of people living in extreme poverty throughout the world was 43 percent. In 2010 that number was down to only 21 percent, and continues to decline. Most of the world’s poorest people live in South Asia and sub-Saharan Africa. China has been able to successfully cut extreme poverty over the last several decades.