The World Bank indicated that China, the world’s third biggest economy, should raise interest rates to help contain the risk of a property bubble and allow a stronger yuan to help damp inflation expectations, Bloomberg reports. The nation’s “massive monetary stimulus” risks triggering large asset-price increases, a housing bubble, and bad debts from the financing of local-government projects, the World Bank said in a quarterly report on China released in Beijing on March 17. The group raised its economic growth forecast for this year to 9.5 percent from 9 percent in January. The World Bank’s call echoes the assessment of private economists – analysts at Morgan Stanley this week said higher reserve requirements for banks may be “imminent” and interest rates could start to climb as early as next month.
Conserving fresh water is becoming increasingly important around the globe, a new report from the World Bank’s Internal Evaluation Group (IEG) says, so the World Bank should encourage countries to charge for water. “Growing water scarcity is a reality, which the Bank and its partners need to confront by putting more emphasis on the challenging areas of groundwater conservation, pollution reduction, and effective demand management,” writes IEG Director-General Vinod Thomas. Reuters adds that the IEG report, Water and Development: An Evaluation of World Bank Support, 1997-2007, said water scarcity had become more of a threat in arid regions, and that about 700 million people in 43 countries were facing stress on water supplies. The report recommended that the World Bank find ways to support countries facing the greatest water problems, and to find a way to attract other donors to ensure water issues are properly addressed. It suggested the World Bank use data on water to promote better understanding of ties between water and economic development.
The World Bank has warned that Eastern Europe, Russia and Central Asia will be threatened by a severe energy crisis in five or six years, if billion-dollar investments are not immediately made for tapping into new gas and oil sources, for retrofitting an ailing pipeline and for reducing waste of energy, in a new report titled Lights Out? The Energy Outlook in Eastern Europe and the Central Asia. “By 2030 the region could become a net importer of natural gas,” World Bank Director for Sustainable Development in Europe Peter Thomson said last week in Brussels. According to the report, demand for primary energy in the region was expected to increase by 50 percent by 2030, while demand for electricity was expected to increase by 90 percent. The report showed the current financial crisis created some breathing room and a window of opportunity for the region to take mitigating actions since energy demand had been significantly dampened. “But this is only a temporary respite before energy availability again becomes a serious concern. Once growth picks back up, so, too, will energy consumption,” it said, Xinhua reports.