World Economy

World Bank chief says Donald Trump shouldn't throw the baby out with the bathwater

Open economies create benefits for all: World Bank CEO
Open economies create benefits for all: World Bank CEO

The world economy has never recovered its growth trajectory since the global financial crisis, but globalization is the booster that everyone — including the United States — now needs, the World Bank's chief executive Kristalina Georgieva told CNBC.

Speaking from the China Development Forum in Beijing, Georgieva acknowledged that inequality — which critics say is caused by globalization — has increased. However, she argued, an interconnected world benefits both developing and developed countries.

"Well, we have learned from our decades of experience that open economies create better opportunities for people in the developing countries, but also for people in the rich world. They have access to cheaper goods. They have a chance to actually export more when the purchasing power in the rest of the world is going up," she said.

An employee walks outside the World Bank headquarters in Washington, United States.
Win McNamee | Getty Images

She noted that in countries where help is given to people who lost their jobs to either exports or automation, anti-globalization sentiment is of a lower degree. It is for that reason that the world should not "just throw our arms in the air in desperation" against globalization, even when there is loud discontent that has resulted in protectionist sentiment around the world, said Georgieva.

Instead, countries should work out a solution in a more "mutually respectful manner."

"The lesson we should draw is that if there is a problem, let's concentrate on the problem and what is the best solution for it. Rather than deciding that yes, we should throw the baby out with the bathwater," she added.

World Bank CEO on China's economic reforms
World Bank CEO on China's economic reforms

The current anti-globalization sentiment and President Donald Trump's policies dominated discussions during the three-day China Development Forum.

One of the latest moves by the president is slashing foreign aid and multilateral funding in his budget proposal — a direct hit at organizations such as the World Bank.

When asked whether the World Bank is marginalized as its relevance is questioned, Georgieva said the multilateral organization had received "a very strong vote of confidence", with record high replenishment of $75 billion, from parties including the U.S., to help the poorest countries.

Here's the transcript of the full interview.

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