World Bank boss: Fed grants reprieve to emerging markets

AP News
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Posted: Sep 24, 2015 4:59 PM

NEW YORK (AP) — The head of the World Bank says the Federal Reserve's recent decision not to raise interest rates immediately will give breathing room to developing countries working on reforming their economies.

In an interview with The Associated Press Thursday, President Jim Young Kim also said China's current slowdown was "entirely predictable" but that the slower growth will lead to a more sustainable Chinese expansion in the long run.

Kim was speaking to the AP ahead of a U.N.-sponsored meeting on a new 15-year sustainable development goals.

He said it's a question of when, not if, the Fed raises rates from record lows near zero.

"What this has done is given us time to go back to emerging markets and developing countries and say 'OK, you've got a little reprieve,'" Kim said.

The World Bank will use this extra time to encourage those countries to make necessary reforms to ensure that "when the rate does go up you won't see this mass exodus of investors," Kim said.

China's shift to a service and consumption-driven economy from an export-led one has necessarily led to "bumpiness" in its growth rate, Kim said. However China remains committed to this reform process, which should lead to "much more sustainable and higher quality growth," Kim said.