With trade tensions escalating, Bjerde cautioned that global economic integration remains key for driving job creation and innovation. She further addressed India’s growth prospects, emphasising the need for higher investment, greater female workforce participation, and enhanced productivity to meet the country’s ambitious “Viksit Bharat 2047” target.
Here are the edited excerpts:
Q: Let me begin by discussing the global economic outlook, with the World Bank estimating a growth rate of 2.7% in 2024, expected to remain steady through 2025 and 2026. Have the downside risks to that forecast increased significantly since the start of the year?
Bjerde: The good news is that the global economy seems to be stabilising. But there are two issues. One it’s stabilising at too low a growth rate and if it goes lower that’s even more problematic. The other message is that we’ve always seen emerging and developing countries grow faster than developed countries. We’re now seeing a slowdown in the growth of developed and emerging markets which means it gets much more difficult to work on the delivery of raising incomes, reducing poverty and getting the kind of recovery that the world is still looking for.
Q: Speaking of the recovery and the negative shocks the global economy has faced in recent years, we are currently experiencing significant volatility and uncertainty, along with an escalation of the potential trade war, with tariffs being imposed by the US and reciprocal tariffs from countries like Canada, Mexico, and China. What impact do you believe this is likely to have in the near term, medium term, and long term?
Bjerde: We have not analysed the impact of tariffs on the global economic outlook. Our focus is very much on our mandate, which is medium- and long-term economic development, with an emphasis on poverty reduction and, crucially, job creation – which has become a significant issue. We estimate that around 1.2 billion jobs will be needed globally by 2030, yet only about 420 million are currently expected to be offered. Therefore, we must double down on the need for job creation, which requires growth. Additionally, there must be opportunities for young people. Many countries around the world have large youth populations, and we want to ensure they have opportunities, which first and foremost come with being skilled and able to access jobs.
Q: That is a good thing, but what we are seeing at this point in time is not just a retreat from globalisation as we know it, but also a retreat from multilateral institutions and multilateralism in general. As the World Bank, how do you view this retreat, particularly by large economies like the US?
Bjerde: At the World Bank Group, along with many other actors and agencies, we are focused on addressing some fundamental issues that countries face. Take, for example, the global health pandemic we experienced a few years ago, for which no one was prepared. What we saw was the urgent need to work together as an international community and act swiftly. Issues like this, along with fragility and conflict—challenges that have no borders—require a collective, global response. Additionally, issues such as the impacts of climate change or natural disasters, which also transcend borders, demand global cooperation.
As long as we continue to face these pressing challenges—and we believe these global issues will persist, including air pollution and air quality, which I know is a significant concern in this region—we believe there will always be a strong need to collaborate across borders and work together in a multilateral, multinational setting.
Q: Speaking of cohesive action and convergence, I’ll ask you this in the context of a conversation I just had with the Chairman of the Board of the Vaccine Alliance, Gavi, whose fund is up for replenishment and currently requires $9 billion. Do you believe that sourcing capital to address some of these challenges you mentioned—climate change, health—will become even more challenging in the current context, with shifting and changing priorities?
Bjerde: Yes, I think we have to be realistic and recognise that there are many challenges when it comes to fundraising in today’s world. First and foremost, many countries are still making fiscal adjustments and are having to revisit and review their budget priorities, which is where we currently stand.
The second issue, as you mentioned, is the uncertainty and the risks the world is facing right now. This is causing many parts of the world—including, of course, traditional donors who have been very supportive of development—to also reassess what their near-term, pressing priorities are. So yes, I do believe we must acknowledge that raising funds is becoming more difficult. However, this also means that we need to think very creatively and ensure we make the most of every dollar and every resource we receive.
At the World Bank, we’ve found it quite effective to leverage resources. For every dollar that comes to us, we make sure to leverage that to generate multiple dollars going out. We’ve learned how to use our balance sheet and market mechanisms to generate more resources than we actually receive. I think leverage is crucial when resources are scarce.
Q: Let’s address some of the challenges that you closely monitor, including poverty alleviation, climate change, and debt. Given the global uncertainties and the ongoing global reset, how concerned are you about global debt today?
Bjerde: I think the heightened indebtedness is a very big concern, particularly in countries with limited resources to service that debt. We see this problem manifesting itself most acutely in Africa. Why Africa? For many reasons, but in part because during COVID, many African countries had to borrow to provide the necessary buffers and financing to protect their populations. Then, of course, we faced multiple crises, including rising interest rates, which made the repayment of that debt much more expensive.
Additionally, many countries in Africa had higher levels of debt relative to GDP, which increased their debt risk, making it more costly to refinance, restructure, or borrow more. This creates a vicious cycle. On top of that, many of these countries face significant expenditures related to their own crises—food insecurity, natural disasters. In many parts of the world, one week a country is dealing with a flood, the next two weeks it’s facing a drought. Being able to anticipate and address these crises is extremely difficult.
So yes, we are very concerned about the level of indebtedness, and we work very closely with countries around the world to ensure that, firstly, there is a good understanding of the level of debt, with transparency and reporting on it. Additionally, we at the World Bank make sure that, through IDA (the International Development Association), our fund for the poorest and most vulnerable countries, those facing significant indebtedness and low income benefit from very concessional, even grant financing from us.
Q: The World Bank’s outlook suggests that most countries are now closer to their comfort levels in terms of inflation, or at least their inflation targets. Does the escalation of this trade war worry you, as it could potentially upset that progress?
Bjerde: We’ve been living with this volatility and higher inflation rates for some time, but we’ve started to see inflation come down, which is, of course, very comforting. It’s crucial that we continue on that path. Any rise in inflation hurts the poorest the most, and that’s what truly concerns us. So, yes, maintaining a lower inflationary environment and being able to sustain it is critical for poverty reduction and ensuring that those who are striving to escape poverty don’t fall back into it.
Q: You’re here in India, so let’s talk a little bit about the view on India as well as the outlook. Your growth outlook at 6.7% is higher than what the government is estimating. The government’s own target is 6.5%. But when we look at the aspiration of a Viksit Bharat by 2047, a high-income economy by 2047, and the World Bank has just put out a prospects report providing various scenarios for India to make that journey, given the global environment, what do you believe India needs to prioritise? We’re talking about an almost 8% growth rate annually for the next two decades.
Bjerde: I must start by emphasising that India is, first of all, an incredibly dynamic and fascinating country, and I always enjoy visiting. I learn so much every time. Secondly, I don’t know of many other countries that have had the growth track record that India has. Between 2000 and 2019, India grew at an average of 6.6% year on year. This is incredible, and I think it has really changed the dynamic in the country.
Of course, COVID hit, and every country was affected in 2020, but the rebound was very strong in India, and in the last three years, India has grown at 7.8%. So, this is, of course, very encouraging.
Now, you’re right; we do estimate that in order to meet its ambitious goal of 2047, India needs to continue growing, but even elevate its growth rate slightly. We believe it’s possible, and there are certain measures and levers that India can employ to accelerate its progress.
One area we think India needs to prioritise is investment. Our report shows that if India can increase its investment-to-GDP ratio from around 33% to 40% over the next 10 years, that would significantly support a higher growth rate.
A second area we’ve looked at is labour force participation. India’s overall labour force participation rate is lower than that of many other countries, and female labour force participation is particularly low. We believe India has a huge opportunity to pivot here. If India could increase female labour force participation from 35.6% to 50%—which would be a nice parity number—GDP could increase by 1%. For a country like India, 1% of GDP is extremely significant, as it translates into a substantial amount of resources.
Thirdly, we believe there’s an opportunity to boost productivity. We’ve identified two key pathways here: one is a quicker adoption of technology, and the other is a faster transition to innovation.
So, we do think it’s possible. It’s important to set such ambitious goals because having an ambition drives progress. We also appreciate that there’s an intermediate step in 2030, where India will assess its trajectory toward the goal of Viksit Bharat.
Q: You talked about productivity gains and how India must focus on that. I’ll ask you this, not just in the context of India, but globally as well. With the move towards more AI adoption, what are we talking about in terms of productivity gains and the economic uplift that we can expect?
Bjerde: I do think that technology and AI will bring productivity gains, and we are already seeing it. Do I think it will eliminate the need for a massive number of jobs? It will affect certain jobs. But I also think it will create other jobs. There are two things that AI cannot do: one is human judgement, which often still needs to come into play, and the second is the care industry, where humans are still very hard to replace. I think the care industry, and healthcare more broadly, is an area where the world is missing a lot of skills and human resources, and I believe this is also an area where India could excel.
Q: The need to move towards gender parity, which is not India-specific, again, but a global issue, a universal challenge. Do you worry today that we’re retreating from taking this issue forward?
Bjerde: I think the last few years have presented us with so many challenges and crises. During COVID, we saw, as we were coming out of the pandemic and starting the recovery, that women were hit harder, especially when it came to returning to work. Women were also often working in industries that were hit very hard, like hospitality and services. So, it was harder for women to get back into the workforce.
Secondly, people made many adjustments to their lives. They consolidated their families in different ways, with elderly relatives moving in and children being home-schooled. I think that held women back in terms of their recovery compared to men.
Now, I continue to worry about a number of obstacles that prevent women from having the same access to opportunities as men. Some of these relate to things like access to services that are conducive to women being in the workplace, which range from childcare to elderly care. Different societies and cultures rely on different services, and I think we really need to focus more on that.
Another area I worry about is that women, and I see this often, find one of the key obstacles to be a lack of safe transportation. Many women would prefer not to work if it requires mobility.
A third area of concern, which we’ve set a target for ourselves on, is that women are behind men when it comes to digital connectivity. We’ve set a goal to connect an additional 300 million women to broadband infrastructure by 2030, because we believe that will be a game changer for many women, particularly in the entrepreneurial space.
Finally, the issue that always comes up is access to finance, but specifically, access to capital. We also want to ensure that we contribute to this by ensuring that another 80 million women have access to capital by 2030. This is where the work we do through our private sector arm will play a very significant role.
Q: How the private sector can do its part in achieving some of the targets you highlighted on the gender front? Where do things currently stand on that? How confident do you feel about the private sector’s role and participation in addressing some of these pressing needs?
Bjerde: So, definitely no one institution or any single source of funding can alone solve the problems that the world faces. We need to work together—both the public and private sectors—and also form partnerships. We have emphasised working closely with our partners, and we have memorandums of understanding with practically every other development institution. Most recently, we have been innovating with the Asian Development Bank to create something we call the Full Mutual Reliance Framework. This means that when we work together on a project, we use one institution’s policies and procedures, so we don’t burden our clients with multiple policies and procedures.
But coming back to the private sector, we’ve put together a very helpful group of private sector CEOs who helped identify and work with us to determine what needs to be created in the markets we work in to attract more private sector investment. A couple of things stand out. First and foremost, governments need to do their part by ensuring that the policy and regulatory environment is stable. There’s nothing worse for a private sector investor than not knowing the environment they’re operating in, or worse, when the environment changes frequently. That’s one thing.
The second issue is that, even with a stable environment, there’s still a need to ensure there is de-risking and guarantees. So, one thing we have done very recently is create a unified platform for guarantees, and it is already becoming a much bigger part of our service offering and our business.
The third part is thinking about what is needed in the local market. One key issue that has come up is local currency financing. We’re offering quite a bit of that now, which is also what the private sector is asking for.
But it’s also about thinking big and bold. One initiative that I am really, really excited about is what we call Mission 300, where we want to connect 300 million people in Africa to electricity by 2030. This would cover half of the 600 million people who are not connected today. We believe this will make a significant material change to the outlook for Africa and for the opportunities available to Africans. And here we see a major role for the private sector. So, we are working very closely with the private sector to mobilise support for this and to make sure we provide the enabling environment by working with governments so they can take a significant part in this.
Q: Speaking about cooperation and looking at templates that could be relevant globally, as you look at India, what do you see as the role, significance, and relevance of India from the World Bank’s perspective in nurturing some of the solutions you were just talking about? Where do you see India fitting into all of this?
Q: I said I would get to the bigger, better ambition of the World Bank. I understand that it’s a work in progress, but how much bigger and how much better has the World Bank gotten since Ajay Banga articulated that move?
Bjerde: It’s been an incredible -pretty much just over a year and a half since Ajay Banga joined us. I think one of the first things he did was reformulate our vision and mission, which is to end poverty on a liveable planet. And that liveable planet is really important because that gets to some of these issues of what does it take for a human being to really prosper in life. That’s the first thing.
The second thing is he brings in so many skills from his previous roles that has made us think smart about our ability in terms of our financial instruments. So, we have been able to also do a lot of optimisation on our balance sheet, to be able to offer innovative products like hybrid capital, like guarantees which again are all about leveraging because again for every dollar that comes in, it becomes six to eight dollars So it’s just really smart
He’s also challenged us and I think this is an area where he’s also asked me to lead this to just become faster, because if we don’t deliver development solutions faster we won’t keep up with the needs of people around the world who are in developing countries. So, we’ve tried to cut down on the time it takes us to prepare projects. We’re making good progress We need to also reduce the time it takes to implement the project, so those full benefits are delivered sooner. We’ve also done things like a Streamline – all of our processes and procedures and even though we’re a big public institution, you don’t have to have the mindset of that and I think he’s really brought that in.
He has also challenged us to think big through these initiatives like Mission 300. He helped us set a target on improving health services to one and a half billion people by 2030. He’s helped us think through some of these women’s economic empowerment aspirations that we have. And we’re thinking now how do we work in all these important sectors such as water, we want to be able to do more, be a really solutions bank when it comes to energy of the future. So he’s done a lot and perhaps most importantly taking all the different parts of our institution and making more out of it, which means what we call the One World Bank Group, which is offering the public and the private and making sure that our clients get the best of us, not by talking to a person from one part but making sure we always offer the whole breadth of instruments that we have to offer. So, we have introduced something we call World Bank Group Managers now who represent the whole group in a number of countries and we’re just going to keep rolling this out.
Q: I do want to end by asking you about your personal India connection. I believe you’re quite the yogi yourself.
Bjerde: Coming to India is just so wonderful but I have to say the yogi in me just feels so at home here because it’s a bustling dynamic and energetic place and at the same time it has this calming zen, stable feel to it. So, I always love coming back. I was here last year and I will come back again.
