Global finance chiefs are stepping up their call for development lenders such as the World Bank to help support economic growth by further opening the infrastructure taps.
Multilateral development banks should present concrete actions by July, according to a draft of the communique for the Group of 20 meeting Saturday in Shanghai. G-20 finance ministers and central bankers also said in the draft obtained by Bloomberg News that they’re committed to advancing investment by focusing “on infrastructure both in terms of quantity and quality aspects.”
Policy makers are looking for new ways to boost growth after seeing diminished returns from central bank stimulus and opposition to fresh fiscal stimulus in some countries. The International Monetary Fund cut its world growth outlook last month, saying the global economy will expand 3.4 percent this year, down from a projected 3.6 percent in October.
Meanwhile, the World Bank said it’s planning to coordinate its efforts more closely with other multilateral lenders, such as the Asian Development Bank and the China-led Asian Infrastructure Investment Bank.
“To boost economic growth in emerging markets, there needs to be a multilateral framework for discussions,” said Lu Zhengwei, chief economist at Industrial Bank Co. Ltd. in Shanghai. “There also needs to be support for infrastructure development. The backdrop of this is when the World Bank is losing influence, and China is trying to promote the AIIB.”
The $100 billion lender with 57 founding members formally opened its doors last month in Beijing and may announce the first batch of investments as soon as June.
“There’s a lot that the multilateral investment banks can do on the demand side,” World Bank President Jim Yong Kim said in a Bloomberg Television interview Friday. The World Bank is trying to work more closely with the AIIB and other lenders, “to increase investment in infrastructure in developing countries.”
Kim said the Washington-based lender is talking about how to deal with the escalating refugee crisis, which the draft G-20 statement identified as a threat to growth. The World Bank and other development lenders will make “huge new investments in the Middle East and North Africa, to see if economic development can have an impact on the fragility, the conflict, the refugees and the humanitarian crises that are there.”