Risks to the global economy

If trade tensions appear as the most visible risk for the global economy, the World Bank warned on Tuesday against other dangers that threaten the economic expansion of the planet.

Ayhan Kose, an economist who leads the World Bank's Development Prospects Group, the author of a global economic forecast published twice a year, has revealed the main concerns of the institution in an interview with AFP.

The World Bank report shows that borrowing by the poorest countries is becoming increasingly important, much of it in foreign currency. They are also granted more often by private lenders who, unlike the World Bank, do not offer concessionary terms.

In addition, with rising interest rates from the US central bank and other institutions, the costs of these loans are increasing. Total debt in the world reached a record $ 184 trillion in 2017, according to the International Monetary Fund (IMF).

The World Bank has said that low-income countries have seen their public debt exceed 50 percent of GDP, up from 30 percent in 2013.

"The level of debt is a source of concern, especially as financial conditions get tougher," Kose said, noting that "emerging and developing-market economies depend on external financing to refinance their debt."

Corporate debt has also ballooned, but "regardless of the source of debt, when balance sheet problems occur in a certain segment of the economy, it ultimately affects real activity," he said. 'economist.

"Borrowers need to understand the consequences of the rapid accumulation of debt as interest rates rise globally," he warned.

According to the World Bank, about one-third of the GDP of emerging and developing economies comes from the informal sector. In some countries this share is even much higher.

"The informal economy is a major problem for many emerging and developing countries," Kose said. "In the end, it's also a symptom of underdevelopment. Thus policies that promote growth also help to improve the formal sector and encourage businesses to turn to it, "he adds.

Government investments are a key factor in fostering growth, whether infrastructure or human capital, which is particularly critical in preparing workers for technological change.

"These expenses will stimulate the economy in the short term while improving the potential of the economy in the long run," the economist said.

The regulation must also be adapted to favor business activity and "should not push companies towards the informal sector".

"It's not a problem that can be solved overnight or even over a year, it's a problem that gets resolved over time," Kose added.

Another concern is the slow growth of per capita GDP in sub-Saharan Africa, which will be less than 1% over the next three years.

This makes "very difficult, if not impossible, a significant reduction in poverty," Kose said.

"Policymakers need to find ways to increase the growth prospects of the region to tackle this problem of poverty," he said.

"Even if we think that these handicaps are localized problems (...) they have implications for other countries, other regions and require immediate attention".

The proportion of the world's poor living in sub-Saharan Africa could reach 87% by 2030 if growth does not accelerate, warned the report.