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World Bank President David Malpass said on Sunday that it would be very difficult for some countries to avoid a recession given global economic forces.
During an appearance on CBS’s “Face The Nation,” moderator Margaret Brennan asked Malpass how countries can avoid a recession, noting the far-reaching headwinds caused by Russia’s ongoing invasion of Ukraine.
“Some countries, it’s going to be very hard to do that. I think that leadership from the stronger countries is very important,” Malpass told Brennan.
Malpass added that central banks have more tools than they did during the 2008 recession, noting that the “strongest countries” were equipped with huge bond portfolios that could be deployed to ramp up manufacturing.
“The U.S. is the world’s biggest economy and can increase production more than anybody else. And so that becomes one of the key variables in the outlook,” Malpass said. “The world needs practically everything that the U.S. makes and there needs to be a process to really boost that production.”
The comments come as President Biden visits Europe to meet with other leaders of the G7 leading economies.
Financial experts have warned that the U.S. may enter a recession due to steep inflation being exacerbated by Russia’s war on Ukraine.
President Biden said in an interview earlier this month that he believes a recession is “not inevitable,” despite the Federal Reserve raising its interest rates at its highest rate in 30 years.
Malpass told Brennan that Federal Reserve chair Jerome Powell should focus less on hiking interest rates and more on ways to return money to the bank.
“He’s got multiple tools. One is regulatory policy, the Fed is a sort of an important regulator of banks. So let the banks lend more,” Malpass said. “And if they had more, they could lend and also the non-bank sector of the U.S. economy. That’s one of the most innovative, and it could put more money into the supply chain.”