Millennium Post

In new WB role, Kaushik Basu sees gloom everywhere

The global economy is not doing well especially with the European debt crisis and the difficult phase would continue for some more time, World Bank chief economist Kaushik Basu has said.

Basu, who till recently was the chief economic advisor to the Indian government, assumed the new post on Monday.

 'It's not doing well. It's a very difficult phase, and the difficult phase will live with us for a while,' Basu told the Wall Street Journal on his thoughts about the global economy, in an interview.

According to him, the subprime mortgage crisis of 2007 and 2008 in the US, exposed another problem – the construction of the euro zone.

'This is no one's fault. The construction of the euro zone is one of the biggest human-made experiments of a system being brought into place. It's a gigantic experiment. It's not surprising that some fault lines would show up,' Basu noted.

The persisting European sovereign debt turmoil is hurting the world economy, which is on a fragile recovery path.

'In today's world, the global economy is becoming one economy. These are problems – with globalisation, with the construction of Europe – I think we will have to live with for a year or more. But the world will come out of that and we will get back to growth,’ he said.

In response to a query on what framework he was bringing to the World Bank from his India experience, Basu said that he was bringing in something interesting.

‘India was my first exposure to hands-on policy. It’s a tumultuous country right now politically and economically, lots happening. I was being tossed into about as much hands on policy as one could think of when I took up the Indian job in December 2009.

‘That experience, with the professional economist’s training, I feel is really a great combination,’ he noted. 


The global economy needs to create an additional 600 million new jobs to absorb theincreasing working-age populations mainly in Asia and Sub-Saharan Africa, the World Bank said in a report. According to the World Development Report 2013, at a time when the world is struggling to emerge from the global crisis, some 200 million people including 75 million under the age of 25 are unemployed. Looking forward, to keep employment as a share of the working-age population constant, in 2020 there should be around 600 million more jobs than in 2005, with a majority of them in Asia and Sub-Saharan Africa. 'The youth challenge alone is staggering,' World Development Report director Martin Rama said in a statement.Rama added that 'More than 620 million young people are neither working nor studying. To keep employment rates constant, the number of jobs will have to increase by around 600 million over a 15-year period'.

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