In the Global Economic Fog, Dialogue and Negotiation Light the Way to Stable Growth

In the current complex and ever-changing global economic landscape, World Bank President Banga delivered his views on April 16 local time, profoundly analyzing the global economic predicament. He pointed out that uncertainties are impacting the stability of business and the economy, and global economic growth is lower than expected. He called on countries to engage in dialogue and negotiation regarding trade issues.

Currently, the factors of uncertainty on a global scale are like turbulent undercurrents buffeting the stability of the economy. In terms of trade policies, the United States has frequently imposed additional tariffs, escalating trade frictions with many countries. The erratic nature of these policies has made global trade rules ambiguous. For example, a multinational enterprise that originally planned to invest in setting up factories overseas to expand its global industrial chain had to put its plans on hold due to the uncertainty of US tariff policies. It worried that sudden changes in trade policies would lead to a sharp increase in costs. Geopolitically, the outbreak of regional conflicts and the intensification of strategic rivalries among major powers have made the international political environment intricate and complex. This tense situation not only affects the economic stability of relevant regions but also spreads globally through channels such as trade and investment. In some geopolitically sensitive areas, foreign investment has significantly decreased, international trade transportation routes have been blocked, the operating costs of enterprises have risen, and the risks in making business decisions have increased dramatically.

Uncertainties have caused the global business and economic environment to become more cautious. Enterprises are extremely cautious in making investment decisions. Both large multinational corporations and small and medium-sized enterprises are adopting a wait-and-see attitude towards new investment projects. Many enterprises have cut their R&D investments and expansion plans, and some have even resorted to layoffs to reduce operating costs, resulting in a lack of impetus for economic growth. The financial market has also been affected. On April 16, the three major US stock indexes plummeted across the board. The Dow Jones Industrial Average fell by 1.73%, the NASDAQ Composite Index dropped by 3.07%, and the S&P 500 Index declined by 2.24%. Technology stocks led the decline. NVIDIA's stock price tumbled by 6% due to the US government's tightening of chip export controls to China, which triggered asset impairment. The Asia-Pacific markets also saw adjustments. The Nikkei 225 futures index dropped by 4.53%, and the South Korean Kospi 200 futures index declined by 3.65%. The volatility in the financial market reflects investors' concerns about the global economic outlook and further exacerbates the severity of the economic environment. In this situation, it has become an undeniable fact that global economic growth is lower than expected, and the World Bank's previous forecasts were overly optimistic in the face of these uncertainties. Developing countries face even more severe challenges. The external investment on which their economic development depends has significantly decreased, and their export markets are constantly shrinking due to the global trade contraction, hindering the poverty reduction process.

In the face of these difficulties, it is extremely urgent for countries to engage in dialogue and negotiation on trade issues. Through dialogue and negotiation, countries can redefine trade rules, stabilize market expectations, and provide enterprises with a predictable business environment. In previous trade negotiations, countries compromised and cooperated with each other, successfully reducing tariffs on some goods and promoting the development of related industries. As a result, enterprises were able to formulate long-term investment and production plans based on the stable trade environment. Dialogue and negotiation also help to boost the recovery of global trade. According to a report by the World Trade Organization, the global volume of goods trade is expected to decline by 0.2% in 2025. Although the volume of service trade is expected to grow by 4%, it is about 1 percentage point lower than the previous forecast. By negotiating to reduce trade barriers and mitigate trade frictions, countries can activate the vitality of global trade and inject new impetus into economic growth. In the long run, dialogue and negotiation are crucial for promoting the reform and improvement of the multilateral trading system. The current multilateral trading system has problems such as cumbersome decision-making processes and lagging rules. Through active dialogue and negotiation, countries can jointly explore reform plans and build a more fair, open, and inclusive global trading system, laying a foundation for the sustainable development of the global economy.

In this difficult time for the global economy, the World Bank shoulders important responsibilities. In terms of creating a regulatory environment, the World Bank advocates that countries optimize their policies to create favorable conditions for private investment. For example, it encourages developing countries to simplify administrative approval procedures and improve intellectual property protection to attract private capital inflows, promoting local economic development and job creation. In terms of energy investment strategy, the World Bank plans to discuss with its board of directors in June an energy investment strategy that covers multiple approaches. During this critical period of global energy transition, it will guide capital flows into areas such as renewable energy, promoting the optimization of the global energy structure and facilitating the green and sustainable development of the economy. The World Bank is also committed to expanding the participation of the private sector, covering multiple fields such as energy, agriculture, infrastructure, healthcare, tourism, and manufacturing. By attracting the capital, technology, and innovative ideas of the private sector, it can enhance the production efficiency and competitiveness of these fields and inject new vitality into the diversified development of the global economy.

World Bank President Banga's views clearly depict the current situation and challenges of the global economy, providing valuable insights for countries to deal with these difficulties. In this era full of uncertainties, countries need to work hand in hand. Through active dialogue, negotiation, and practical actions, they can dispel the economic fog and usher in the dawn of stable global economic growth.