World Economy

World Bank's Kim: Growth slower for emerging markets

World Bank: Fed should wait to hike

Jim Yong Kim said Thursday that emerging markets will experience slower growth in the near future.

"There are a lot of headwinds," the World Bank president told CNBC's "Squawk Alley." "A big part of it is the fact that commodity prices are down and continue to be down, and a lot of it has to do with the slowing growth rate in China."

Earlier on Thursday, the Caixin/Markit PMI index showed manufacturing in the region dropped to a new 6 1/2-year low of 47.2, ticking down from August's reading of 47.3 but still better than an earlier flash estimate of 47.

Kim also said that a possible Federal Reserve rate hike would limit the access to capital for emerging markets. "All these things are giving us a sense that growth will be slower globally, but especially in the emerging markets."

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Kim echoed the remarks made by IMF Managing Director Christine Lagarde, who on Wednesday told CNBC that emerging markets will likely see their fifth-consecutive year of declining growth rates.

Still, Richmond Fed President Jeffrey Lacker, a voting member, told The Wall Street Journal that the central bank could still raise interest rates this month.

"I don't see why not," he said. "We will have another labor market report. Presumably that will move us further toward labor market improvement."

The Fed kept interest rates low at its last meeting, a decision that gave emerging markets some breathing room to reform their economies further, Kim told The Associated Press on Sept. 24.

Jim Yong Kim speaking at the 2015 CGI Annual Meeting in New York.
Adam Jeffery | CNBC

However, Kim warned that raising rates this year could have dire consequences for emerging market economies, especially those tied closely to commodities.

"Any of the oil and gas producers are already in a terrible situation [and] it looks like, to us, that the price will be down for a long time," he said. "And when Iran goes online, we expect the price of oil to go down another $10 a barrel."

U.S. crude prices have fallen more than 45 percent in the last year and over 20 percent in 2015.

— CNBC's Nyshka Chandran contributed to this report.