Live from Warsaw: Addressing Challenges to Growth, Security, and Stability
Follow the event on Twitter #ResilientFuture
Speakers
-
-
-
Associate Professor, Warsaw School of Economics -
Moderator
-
Journalist and television presenter
Read the transcript
- 11:03 Thank you very, very much for the warm welcome from everyone.
- 11:11 Thank you for the hospitality and for showing me the city of Warsaw.
- 11:16 I want to thank the Warsaw School of Economics for hosting us today.
- 11:22 I am honored to be here to commend the people of Poland and Europe for your embrace of people
- 11:30 fleeing the war in Ukraine.
- 11:34 I feel deep solidarity with you and admire your generosity
- 11:38 in welcoming so many neighbors into your homes.
- 11:42 Dziękuję.
- 11:51 I first visited Warsaw in 1975, arriving by train via Prague, Bratislava, and Kraków.
- 12:00 As you know too well, times were harsh then – under the burden of socialism, Soviet
- 12:06 oppression, and their invasion of Czechoslovakia in 1968.
- 12:12 The protests and shortages that emerged brought about Poland’s Solidarity movement, which
- 12:19 ultimately changed the course of Eastern Europe and beyond.
- 12:24 We are again living through a dangerous period of overlapping crises and conflicts
- 12:29 with Poland near the center.
- 12:32 I have been deeply shocked and horrified at Russia’s invasion of Ukraine, the atrocities
- 12:38 committed against the civilian population, and the loss of life and livelihoods
- 12:43 for millions of Ukrainians.
- 12:46 The attacks on people and infrastructure are causing tremendous suffering, threatening
- 12:52 international peace and security, and endangering the basic social and economic needs
- 12:58 of people around the world.
- 13:01 I met with President Zelenskyy on February 19 in Munich and then spoke with him after
- 13:07 the invasion to discuss World Bank support for the people of Ukraine.
- 13:12 Since the invasion, the World Bank Group has provided fast-disbursing financial support
- 13:17 to Ukraine to help the government provide critical services to people, including wages
- 13:23 for hospital workers, pensions for the elderly, and social programs for the vulnerable.
- 13:29 Through IFC, we have provided immediate working capital for companies
- 13:35 providing supplies ton Ukraine.
- 13:38 I’m pleased to announce today that the World Bank is currently preparing
- 13:42 a nearly $1.5 billion operation for Ukraine to support continuation of
- 13:48 essential government services during the war.
- 13:51 This was enabled by yesterday’s approval of IDA19 support of $1 billion to Ukraine
- 13:58 and $100 million to Moldova by IDA donor and recipient countries.
- 14:05 The World Bank was created in 1944 to help Europe rebuild after World War II.
- 14:13 As we did then, we will be ready to help Ukraine with reconstruction when the time comes.
- 14:20 In the meantime, we are working to help Ukrainian refugees as they plan their return home; help
- 14:28 communities as they absorb Ukrainians; and help the many millions of internally displaced
- 14:35 persons in Ukraine who have lost their homes and livelihoods.
- 14:40 We are analyzing global impacts of the war in Ukraine, including the spike in food and
- 14:45 energy prices, and preparing a surge crisis response that will provide focused support
- 14:53 for developing countries.
- 14:55 The violence is unfortunately not confined to Ukraine.
- 15:00 Just over the last year, we have witnessed serious setbacks for development and security,
- 15:06 including Afghanistan’s collapse, Lebanon’s crisis, and coups and violence across the
- 15:14 Sahel, Ethiopia, Somalia, and Yemen.
- 15:18 Millions of Syrians are living in refugee camps in Jordan, Lebanon, and Turkey.
- 15:24 Inter-ethnic and inter-religious strife plagues Myanmar and other parts of Asia.
- 15:32 And in Latin America and the Caribbean, levels of crime and violence are alarmingly high,
- 15:37 with some urban and rural areas controlled by criminal gangs or drug cartels.
- 15:44 The trend toward insecurity is deeply concerning.
- 15:48 This year, 39 of the 189 member countries of the World Bank Group – 39 of 189 - are
- 15:56 experiencing open conflict situations or remain worryingly fragile.
- 16:02 The number of people living in conflict areas nearly doubled between 2007 and 2020.
- 16:09 Today, in the Middle East and North Africa, one in every five people lives in an area
- 16:15 affected by conflict.
- 16:18 This unraveling of security has brought a surge in the number of refugees, which more
- 16:24 than doubled over the last decade to exceed 30 million refugees in 2020.
- 16:30 The war in Ukraine has already displaced an additional 10 million people from their homes,
- 16:36 pushing more than 4 million people – primarily women and children – into neighboring countries,
- 16:43 most of them to Poland and Romania.
- 16:47 We recognize that each of the ongoing crises hits the vulnerable the hardest, often women
- 16:53 and girls.
- 16:54 And all the while, we are still suffering the health, economic, and social setbacks
- 17:00 of a global pandemic and economic shutdowns.
- 17:04 Millions of lives have been lost and millions more are suffering amid the massive reversals
- 17:10 in development that hit the poor particularly hard.
- 17:14 Since the outbreak of COVID-19, violence against women and girls has intensified.
- 17:20 Global indicators on food, nutrition, and health have worsened.
- 17:24 And children lost more than a year of education due to school closures, with 1.6 billion children
- 17:32 out of school globally at the peak of lockdowns, reversing a full decade of gains in human
- 17:39 capital.
- 17:41 Never have so many countries experienced a recession at once, suffering lost capital,
- 17:47 jobs, and livelihoods.
- 17:49 At the same time, inflation continues to accelerate,
- 17:53 reducing the real incomes of households around
- 17:55 the world, especially the poor.
- 17:58 The extraordinary monetary and fiscal policies that advanced economies have been implementing
- 18:04 to boost their demand, combined with supply constraints and disruptions, have fueled price
- 18:11 increases and have worsened inequality around the globe.
- 18:16 One measure that captures the growing concern of inflation and inequality is the stagnation
- 18:22 in real median income across much of the world.
- 18:26 Another measure is the likelihood that poverty increases will continue in 2022 as inflation,
- 18:33 currency depreciation, and high food prices hit home.
- 18:38 The war in Ukraine and its consequences are also creating sudden shortages of energy,
- 18:44 fertilizer, and food, pitting people against each other and their governments.
- 18:49 Even people who are physically distant from this conflict are feeling its impacts.
- 18:55 Food price spikes hit everyone and are devastating for the poorest and most vulnerable.
- 19:00 For every one percentage point increase in food prices, 10 million people are expected
- 19:06 to fall into extreme poverty.
- 19:09 The rich can afford suddenly expensive staples, but the poor cannot.
- 19:15 Malnutrition is expected to grow, and its effects will be the hardest to reverse in
- 19:20 children.
- 19:22 Trade disruptions have already sent grain and commodity prices soaring.
- 19:28 Wheat exports from Black Sea ports have been sharply curtailed.
- 19:33 And intense drought in South America is reducing global food production.
- 19:39 Global food commodity markets are large and well-established, and
- 19:45 they tend to self-adjust to disruptions in production.
- 19:49 However, additional factors are making the current food supply problems more acute
- 19:55 namely the supply of fertilizers, energy prices, and self-imposed food export restrictions.
- 20:03 Fertilizer prices are dependent on natural gas prices, which have surged.
- 20:08 As LNG is shipped to Europe, LNG shortages are occurring elsewhere, reducing fertilizer
- 20:16 production, and disrupting the sowing season and harvest productivity.
- 20:23 Russia and Belarus are both large fertilizer producers, adding materially to the problem.
- 20:31 The financial repercussions of the energy shock are intertwined
- 20:34 with the global community’s efforts on climate change.
- 20:38 Russia has been an important source for the world’s energy, including oil,
- 20:43 coal, and gas – the latter supplying Europe through a network of pipelines.
- 20:49 I’ve been pleased to see Europe follow a path toward diversifying its energy mix away
- 20:55 from Russia and considering LNG imports and nuclear power for electricity baseload,
- 21:03 but these take time.
- 21:05 The rapid addition of major new energy production in Europe and other parts of the world
- 21:11 will be a necessary ingredient for global recovery and energy security in Europe.
- 21:19 The World Bank Group strongly supports the integration of climate and development goals.
- 21:25 This recognizes the urgency of growth and development at the core of our mission of
- 21:31 alleviating poverty and boosting shared prosperity;
- 21:35 and the global community’s pledges to slow
- 21:38 the growth in human-linked greenhouse gas emissions.
- 21:43 These pledges for global public goods will require hundreds of complex, multi-decade
- 21:49 projects that reduce emissions and are funded by the global community.
- 21:54 We are working to tackle these challenges through analytical work, including our Country
- 22:00 Climate and Development Reports and our Infrastructure Sector Assessment Programs.
- 22:06 We are pleased to support Poland’s efforts to increase energy efficiency and continue
- 22:12 its transition away from coal.
- 22:15 On the economic front, trends are not encouraging.
- 22:18 Prior to the war in Ukraine, the recovery in 2022 was already losing momentum due to
- 22:24 rising inflation and lingering supply bottlenecks.
- 22:27 While advanced economies were expected to return almost to their pre-pandemic growth
- 22:32 rates in 2023, developing economies were lagging substantially behind.
- 22:39 The war in Ukraine and the COVID-19 lockdowns in China are further reducing the recovery path.
- 22:47 Of concern, the repercussions are worsening the inequality as the war affects commodity
- 22:52 and financial markets, trade, and migration linkages, and investor and consumer confidence.
- 23:00 Advanced economies with well-developed social protection systems
- 23:04 are cushioning parts of their populations from the damage from inflation
- 23:09 and trade blockages, but poorer countries have limited fiscal resources
- 23:14 and weaker systems to support those in need.
- 23:18 Currency depreciations and inflation are hitting the poor hard,
- 23:23 causing fast increases in 2022 poverty rates.
- 23:28 Adding to the burden, developing country debt has risen sharply to a 50-year high—at roughly
- 23:34 250 percent of government revenues.
- 23:38 Debt vulnerabilities are particularly acute in low-income countries, where sixty percent
- 23:43 are already experiencing or at high risk of debt distress.
- 23:49 Most emerging market and developing economies are ill-prepared to face the coming debt shock.
- 23:56 Exposures to financial sector risk are opaque at this point, but one measure, the cost of
- 24:02 insuring against default in emerging markets, has reached its highest point since the onset
- 24:09 of the pandemic.
- 24:10 As we assess these overlapping crises and prepare for the Spring Meetings of the World
- 24:15 Bank Group and the IMF next week, I want to highlight some areas for action.
- 24:22 First, to effectively allocate capital.
- 24:26 The problem of inequality and severe concentration of wealth in narrow segments
- 24:31 of the global population is worsening.
- 24:34 Trillions of dollars of debt and capital are
- 24:36 being guided by advanced governments to over-capitalized
- 24:40 sectors, harming growth, supply chains, jobs, and median incomes.
- 24:46 The result is deepening inequality through the massive misallocation of global capital
- 24:52 away from small businesses, working capital and development.
- 24:57 I call on the governments and central banks of the advanced economies to alter fiscal,
- 25:03 monetary, and financial regulatory policies that are concentrating wealth and income,
- 25:09 misallocating capital, and fueling inflation.
- 25:14 Second is to promote growth and production.
- 25:17 A primary path for global recovery is to create policies, financing, and innovation that invite
- 25:23 investment inflows, allow the investment base to broaden, and encourage production to increase.
- 25:31 This defines an effective response to shortages and high prices.
- 25:37 Decentralized allocation of capital and policies
- 25:40 that foster currency stability are key ingredients.
- 25:43 Recent currency depreciations and the slide into multiple exchange rates are strong reminders
- 25:51 that sound monetary and fiscal policies are vital.
- 25:54 Importantly, we need to redouble our growth efforts on public and private sector solutions
- 26:00 that provide clean water, dependable electricity, sustainable agriculture, quality education,
- 26:08 health emergency preparedness, and digital access.
- 26:13 Third is to keep markets open.
- 26:16 In addition to large increases in diversified energy production, countries should also release
- 26:22 the most binding restrictions on their imports and exports.
- 26:27 This is an important step in shortening the crisis and strengthening the recovery.
- 26:32 Most of the trade barriers protect the privileged at the expense of the rest of society,
- 26:38 worsening inequality.
- 26:40 This includes quotas, high tariff rates, high export taxes, and subsidies that distort trade.
- 26:48 Each of these causes asymmetrical damage to the poor – from rice, peanut, and sugar
- 26:55 import quotas; to costly production subsidies for cotton and ethanol; to domestic content
- 27:02 requirements that undercut productivity.
- 27:07 Last, but not least, is a steadfast commitment to security and stability.
- 27:12 Durable peace takes constant effort to strengthen institutions, reduce inequality,
- 27:19 raise living standards, and provide defenses.
- 27:22 In the alternative, security crises trigger massive
- 27:26 increases in poverty and decimate the middle class.
- 27:31 As we look forward to Ukraine’s rebuilding, that’s an effort we all desire,
- 27:37 I would like to conclude by recalling Poland’s experience.
- 27:40 Even while confronting a failed communist system of central planning,
- 27:45 Poland began introducing market mechanisms.
- 27:49 Amid censorship, it was able to create a vibrant social and civil movement of Solidarity.
- 27:56 I saw this first-hand in 1975 in the enthusiasm Poles showed me and other foreigners.
- 28:04 The determination and hard work of the Polish people paid off.
- 28:08 Decades of preparation had them ready to proceed quickly
- 28:12 as soon as there was an opening to freedom.
- 28:15 Poland provided strong education, liberalized the economy, privatized state-owned enterprises,
- 28:22 committed to currency stability, attracted investment,
- 28:25 and became internationally competitive.
- 28:28 The transition from a planned economy to a market-based one brought down inflation from
- 28:34 more than 500 percent in 1990 to less than 10 percent in 1999, and then kept inflation low.
- 28:43 Progress was remarkably rapid because
- 28:46 it was anchored in shared goals and aspirations,
- 28:50 valuing peace, freedom, and economic liberalization.
- 28:55 These values will be critical as Poland works through the many overlapping crises
- 29:00 facing the region and the world.
- 29:02 Economic transformation matters in part because of its impact on society.
- 29:09 Poland’s spontaneous generosity – at the national and municipal levels –
- 29:14 toward Ukrainian refugees is an inspiration.
- 29:19 When Poland’s economic transformation occurred,
- 29:22 Poland received strong support from the international
- 29:25 community, and I’m sure Ukraine will too.
- 29:29 Concerted international action against conflict
- 29:32 and violence requires that international institutions
- 29:36 focus on the roles in which they have a comparative
- 29:39 advantage, including monitoring cross-border
- 29:43 financial flows, providing humanitarian assistance,
- 29:47 and building capacity on the ground to strategically
- 29:50 allocate and manage peace-keeping operations.
- 29:54 Much of the action will necessarily be at the country level.
- 29:59 Our comparative advantage at the World Bank Group is to deliver on the ground and share
- 30:05 good practices, working closely with governments, civil society, and the private sector.
- 30:11 You should count on us, as we count on you
- 30:15 to support innovative approaches to the front lines of development.
- 30:20 It is here that we can win the battles against the multiple crises we are facing.
- 30:25 I want to thank you all very much.
- 30:28 Thank you.
About the Spring Meetings 2022
The Spring Meetings bring together leaders from government, business, international organizations, and civil society, along with a diverse group of experts, to discuss global challenges and the path ahead. Watch the replay of our events dedicated to international development.
Apr. 12: Addressing Challenges
Apr. 19: Responding to Global Shocks
Apr. 20: Opening Press Conference
Apr. 20: The Digital Revolution
Apr. 21: Financing Climate Action
Apr. 21: Support to Ukraine
Apr. 22: Fragility
Apr. 22: Preserving Open Trade
Apr. 23: Human Capital
Available with simultaneous interpretation in Arabic, French and Spanish.