A preview of the spring meeting
Interview: World Bank---Bourguignon, Francois---Chief Economist
>> well, the international monetary fund and world bank will kick off their semiannual meet innings washington this weekend. finance ministers and central bankers from the group of g-7, industrialized nations, will also be holding talk once the sidelines. joining us to give us a preview of the spring meeting is the world bank chief economist. thank you for joining us, sir. appreciate it very much.
>> thank you.
>> global growth, interestingly, is apt to be the theme at this meeting compared to the last times that you have met collectively, when it was managing global crisis. it must be an interesting, albeit, refreshing change.
>> certainly. this year we will be first discussing very very good news. european growth is faster among european countries, which of course is our objective.
>> interestingly along that line, you are recently quoted as saying you are observe serious imbalances in the economy, the global economy, and that needs to be corrected urgently. what are the imbalances, and how would they be corrected?
>> of course. the reason why european countries have done well lately, not only because of their policies have been improving steadily over time and they are now in many cases on the sustained growth path, but is also because in european countries, the situation has been rather variable. now, if we look at the situation of different countries, it is true there are imbalances and namely president fiscal deficit in the north and certainly the fiscal differences in the u.s., which is creating some worries about the future. we will expect an adjustment certainly in interest rates in the coming years, and the problem is to make sure these adjustments will be as ordinarily as possible, and will not happen in kind of crisis scenario which would be a total disaster for everybody, not only in the european countries, but also and maybe still more in developing―in the european countries.
>> our previous guest talked about the federal budget deficit as well as the―well, let’s just say the federal budget deficit and saying that possibly could be as destabilizing for the u.s. government as it was for new york city in the 1970’s. that ultimately could lead to some sort of global financial crisis. will that be an issue that will be discussed, domestic fiscal matters of the united states of america?
>> i don’t think it will be on the agenda to discuss in detail what should be the domestic agenda in the u.s., but it is their job to think of ways of avoiding the rm crisis you are referring to. while all are absolutely convinced that if the present situation is not handled with care, then it may, indeed, be a major financial crisis preparing itself.
>> as far as forecasts are concerned, the world bank is forecasting 4.6% g.d.p. growth for the u.s. this year, 1.7% for the european union. the discrepancy could not be more stark. the european union, a new economy created to form prosperity, yet it appears not to be working. what is wrong? why is europe lagging?
>> it’s difficult for the chief economist of the world bank to stop thinking and discussing what is wrong or what is not working in the economy systems of europe, and why there are differences between europe and then the united states. in the long run there is potential for europe to grow. there is some gap which builds up over the last 10 years or so between the u.s. and europe, and therefore, there is some potential for recovery of europe and the u.s. the other thing is to know how this will be possible. it is true europe has gone through important adjustments processes. it is true europe will go very shortly into a new adjustment process with its enlargement i. am confident at some stage this recovery will take place and this will be the opportunity maybe for regions in the developing world, which are not doing so well because they are very closely linked to the european economy to take off or to accelerate their development. of course i am thinking to africa.
>> mr. bourguignon, thanks to you. he is the chief economist with the world bank. microsoft is facing delays in the new windows and the company is losing money on some other new products. a preview of the earnings next.
