Tuesday, August 16, 2022
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AIIB’s Erik Berglof on ongoing economic turmoil and more

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Q1: How different is the current economic turmoil that India and the world is experiencing from the past ones?



Ans:





>We are in a world which is very different after February 24


>The pandemic had created a divergence between the advanced economies and developing economies


>The divergence was playing out in access to vaccines, scarring in terms of unemployment and GDP growth; and scarring from education losses


>Apart from inflationary pressure, new rises of fuel and food prices started impacting from Feb 24


>Since the Cold War, we have benefited from the ‘peace dividend’


>Don’t see a convergence between advanced and emerging economies — that is a new feature of the world


Q2: Are we heading towards yet another global recession and do you see it as a mild or strong one?


Ans:


>Possibility of a recession is true for the advanced economies


>After rapid price rises, central banks have reacted now, which triggered a recession


>We are not going to see a major recession like the global financial crisis


>It will be a recession of the more traditional type



Q3: The tension between India and China has increased in the past two-three years. Has it affected AIIB’s functioning and project funding in India, since AIIB is considered as a China-led bank?


Ans:


>The association of ‘China-led bank’ is unfortunate


>China has a quarter of shares in AIIB. Europe has another quarter. More than half is for other countries


>AIIB has played a positive role in rebuilding the relationship between India and China


>AIIB’s most important client by some stretch is India


>We have a problem because there may be too much activity in India. Markets don’t like too much concentration

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