China’s Reluctance To Deliver More Stimulus Puts Burden On US, World Bank President Says
China’s unwillingness to deliver stimulus on current international slowdown is putting burden on the US World Bank President says.
(Bloomberg) -- China’s unwillingness to deliver more stimulus during the current international slowdown is putting more pressure on the US to support international growth, World Bank President David Malpass said.
“China in previous global down cycles was counter-cyclical, meaning they would cut interest rates, they would increase their government spending,” Malpass said in an interview with Bloomberg Television. “They’re doing less of that this time.”
The World Bank warned last week that an aggressive wave of policy tightening could tip the global economy into a recession next year. Central bank decisions this week are expected to deliver interest-rate increases adding up to more than 5 percentage points in total.
Sweden’s Riksbank starts proceedings Tuesday, with policy makers anticipated by economists to accelerate tightening with a 75 basis-point move. US officials are then expected on Wednesday to raise borrowing costs by the same amount to keep up the pressure on resurgent inflation.
The World Bank estimates 2023 GDP growth will slow to 0.5%, and contract 0.4% in per capita terms that would meet the technical definition of a recession.
A key difference is that China has “been less eager to really stimulate this time,” Malpass said. “That may be good for their economy and good for the long run, but it means for the world you’ve got the No. 2 economy that’s not really jumping forward. That puts more burden on the US.”
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