The world is in a tense moment, but I think the financial systems are holding up. The big question is growth, how to achieve more growth and productivity”.
David Malpass, President of the World Bank.
World Bank President David Malpass said Friday that the risk of a US default is adding to the problems facing the slowing global economy as rising rates and high debt levels they are holding back the investments needed to drive higher production.
“It’s clear that a crisis in the world’s largest economy would be bad for everyone,” he told Reuters on the sidelines of the G7 meeting. “The repercussions would be dire if we didn’t get it.”
Malpass said that the need to boost productivity and growth, as well as address the high debt overhang faced by a growing number of countries, had been discussed during the G7 meetings.
“And that means a prolonged period of slow growth. It’s a big concern, especially for people in the poorest countries,” she said. “The world is in a tense moment, but I think the financial systems are holding up. The big question is growth, how to achieve more growth and productivity”.
Stagnation
Deadlock in Washington over raising the US government’s borrowing limit, now at $31.4 trillion, is adding to global economic concerns, after a new report from an independent congressional office cited a “significant risk” of a historic default in the first two weeks of June.
The report from the US Congressional Budget Office (CBO), released on Friday morning, supported earlier warnings by Treasury Secretary Janet Yellen that a default could occur as early as June 1.
“There is a significant risk that, at some point in the first two weeks of June, the government will no longer be able to pay all of its obligations,” the CBO warned.
The congressional budget certifier also noted that the federal government’s debt payments “will remain uncertain through May, even if the Treasury finally runs out of funds in early June.”
