Logo of Phnom Penh Post newspaper Phnom Penh Post - WB: ‘Trade tensions risk worsening global poverty’




WB: ‘Trade tensions risk worsening global poverty’

Content image - Phnom Penh Post
World Bank Chief Economist Pinelopi Koujianou Goldberg on Tuesday warned that increasing trade tensions could increase global poverty levels. NICHOLAS KAMM/AFP

WB: ‘Trade tensions risk worsening global poverty’

As global trade tensions persist, investments are put on hold and without that cash to boost economic growth, poverty could surge, the World Bank’s chief economist warned on Tuesday.

Without growth “inevitably, people will struggle,” Pinelopi Koujianou Goldberg said.

The US-China trade war – involving hundreds of billions of dollars in two-way trade – is at the centre of global disputes that also include Washington’s friction with the EU, changing rules over US trade with Canada and Mexico, and Brexit.

Amid the uncertainty, investments have declined, which undermines growth, especially in poor regions.

“This means that some countries will never manage to get out of poverty,” said Koujianou Goldberg, who has joint US-Greek nationality.

“But it also means countries that have managed to lift themselves out of poverty, that have become middle-income countries by now, they may revert, they may go backwards.”

Koujianou Goldberg said it is a particular concern for Africa, where poverty is concentrated and economies are more fragile – but also where debt levels are “higher than ever”, increasing the risk of a financial crisis.

The World Bank and International Monetary Fund are among forecasters who have cut projections for growth this year and next, and the trade wars have continued and even worsened in recent months.

“Many of us thought the trade tensions were a temporary phenomenon, that they would have gone away by now. But instead, they have escalated over time,” she said.

The World Bank released a report on Tuesday warning that if the trade conflict worsens “more than 30 million people could be pushed into poverty [measured as income levels below $5.50 a day]”.

That equates to a drop in global income of as much as $1.4 trillion, the report said.

But trade continues to provide a lifeline to pull countries out of poverty, Koujianou Goldberg said, if policymakers take steps to plug into worldwide production linkages knows as “global value chains”.

The advantage for less developed countries is that they can step onto the production ladder with just one component, without needing the advanced technology and skills to manufacture a finished product.

For middle-income economies, it is improvements in roads and ports and joining free trade agreements to ensure “trade across countries is frictionless”.

“Your strategy depends on your stage of development”.

South Korea and Poland “have managed in a relatively short period to transition from very simple manufacturing to innovation-intensive activities”.

Mexico had success early on with auto manufacturing but then “got stuck”, Koujianou Goldberg said, partly because of a conscious decision to not invest in education and training to keep wages low.

“If you try to keep wages low forever, and you don’t invest in your people, eventually you’ll be stuck,” she said.

MOST VIEWED

  • School reopening to be postponed until November

    Minister of Education Hang Chuon Naron on Tuesday wrote to Prime Minister Hun Sen requesting a delay of school reopening across the Kingdom until November, when the new academic year begins. In his letter, Chuon Naron said the postponement is warranted to avoid the new

  • Foreigners in Kingdom must now register in FPCS system

    The Ministry of Interior’s General Department of Immigration (GDI) announced that it would not grant visa extensions to foreigners staying in Cambodia if their names are not listed on the Foreigners Present in Cambodia System (FPCS) by July 1. Foreign nationals can register in the

  • Covid-19 at ‘alarming rate’, health ministry says

    The Covid-19 risk level for individual transmission is at an “alarming rate” in the Kingdom and its probability is “not low”, warned Health Ministry spokesperson Or Vandine. “Cambodia’s coronavirus scenario is classified as being at an early stage of the pandemic because of ongoing

  • Mandatory quarantine for 30,000 workers begins

    Some of the roughly 30,000 workers from factories and enterprises across the Kingdom who went on leave during Khmer New Year began their government-imposed 14-day quarantine on Monday. Speaking at a press conference while visiting workers at the Phnom Penh Special Economic Zone on Monday, Ministry

  • Unemployed to get $40 per month

    The Ministry of Labour and Vocational Training has instructed enterprises, business owners and travel agencies in five provinces to prepare the proper forms for the suspension of employment contracts. This, it said, will make it easier for the ministry to transfer $40 a month to workers

  • Gov’t travel ban flouted

    While the majority of Cambodians have paid heed to Prime Minister Hun Sen’s order to stay put and not travel during the Khmer New Year – the holidays of which were also postponed – several hundred have left Phnom Penh nonetheless. They have allegedly breached provincial

  • G20 energy ministers struggle to finalise oil output cuts

    Top oil producers struggled to finalise production cuts during a virtual summit held by Group of 20 (G20) energy ministers on Friday, despite US President Donald Trump’s mediation efforts to end a standoff with Mexico. The final G20 communique appeared to gloss over simmering divisions

  • Kingdom revises travel restriction order

    The government on Friday eased the district and provincial border restrictions issued on Thursday. People are now allowed to cross districts within their provinces. Phnom Penh and Kandal province are to be treated as a single region where people are allowed to travel freely. In

  • Private schools struggling

    The Cambodian Higher Education Association has claimed that 113 private educational establishments are facing bankruptcy because of their inability to pay rent and staff salaries in light of nationwide school closures caused by the Covid-19 outbreak. It said the financial trouble started when the Ministry of

  • Khmer New Year holidays postponed

    In an effort to halt Covid-19 infections in the Kingdom, Prime Minister Hun Sen has postponed the Khmer New Year holidays scheduled from April 13 to 16. While the people will not have their usual break, nor will there be any public celebrations or gatherings at pagodas,