CNBC Transcript: World Bank President David Malpass Speaks with CNBC‘s “Squawk Box” Today
WHEN: CNBC’s “Squawk Box”
WHERE: Today, Monday, June 24, 2019
Q1 hedge fund letters, conference, scoops etc
The following is the unofficial transcript of a CNBC interview with World Bank President David Malpass on CNBC’s “Squawk Box” (M-F 6AM – 9AM) today, Monday, June 24. The following is a link to video of the interview on CNBC.com:
Watch CNBC’s full interview with World Bank President David Malpass
JOE KERNEN: Alright, Kayla, thanks. Stay tuned, we’ve got some great guests coming up here. Rising trade barriers, sharper than expected slowdowns and major economies have paved the way for the World Bank to reduce its Global Economic Growth Forecast for the year. Joining us now is David Malpass, he is World Bank President, a friend of the show. The brains behind the operation is his wife Adele that is a good friend and she -- is she in the IFB right now? Sort of--
DAVID MALPASS: She is—
JOE KERNEN: She is--
DAVID MALPASS: --be calm about Joe.
JOE KERNEN: Be calm. David, you were -- I would say it is fair to say kind of seen as a disruptor when you came to the World Bank and your name was bandied about. Do you feel like you’ve -- you’re cleaning up a bit of a mess or have you had some good stuff to start with and it is moving forward in a positive way?
DAVID MALPASS: I -- I think it is moving forward in a positive way. But because there is a focus, there is a purpose to it, which, for me, is to have individual countries do better than they have been doing. If you think about the world, lots of the news every day is on deals in the U.S., it is on growth in the U.S. and Europe and Japan. But for the reality of billions of people, hundreds of billion -- billions of people, excuse me, is what their country is doing that day. So that’s Kenya, how do you get fertilizer to grow crops? That’s South Africa, how do you get electricity when there is a brownout? And so on, down. In that regard, the bank can have a good impact. I’m helping by helping it focus on those good outcomes.
JOE KERNEN: Do you feel like, at this point, for lack of a better term, are we getting the bang for our buck that we deserve? And I can’t imagine every under developed region of the world is ready for just a private sector partnership. There still must be places that just absolutely need help just with medicine, food, shelter, water, whatever.
DAVID MALPASS: That’s right, so the World Bank does some of both. There is a private sector arm that tries to invest even in the most fragile states where there is a private sector partner. Also, it tries to identify changes in the climate that can make for a better private sector. So, there is a full recognition that growth and profit value-added has to come from some kind of private sector activity. But then for -- in a lot of cases, the transfers still go to the governments. Now the question is, what are you -- the issue is to try to get the governments to move as quickly as possible toward liberalizing markets, toward allowing people to have some freedom of pricing, of the products they decide to produce. And also, the type of jobs that they can get, meaning what kind of technical training is available or can they aspire to?
JOE KERNEN: David, you’re a free market guy. Where are you on the friction that maybe is sort of – we’re sort of bringing it upon ourselves in global trade with tariffs? Is it worth it for China? Were you behind that policy that the Trump administration is following?
DAVID MALPASS: Well, I worked on China quite a bit. But, I don’t work on it now in the sense of tariffs. But, I would say, you know, China was moving in the ’90s and in the 2000s toward market policies, toward liberalized pricing. I was there, I went off in the ’90s, and they were liberalizing the pricing in one sector after another with huge economic gains that brought -- you know, China has lifted 850 million people out of poverty, which is hugely helpful to the rest of the world. So, that was a good trend. As we stand now, there are parts of the economy that are state dominated, many parts that have subsidies. And so, as they could compete fairly, that helps the rest of the world. Can I make one other point, Joe, that when people talk a lot about international trade or tariffs, to -- for most countries, the internal trade, the commerce that they have between businesses, between one town and another, is even more important than their international trade. So, I would like to see a lot of focus on how do you allow businesses to exchange goods and to complete a contract? That oftentimes is the critical thing in getting more growth.
JOE KERNEN: Kelly was just showing me where negative interest rates are around the world. What is happening? And you could have been on the Fed. You could have been on a Fed head at some point. Can you tell us –
ANDREW ROSS SORKIN: Still could be.
JOE KERNEN: Still could be. Can you tell me -- what -- where are we? What’s going on?
DAVID MALPASS: So, one thing going on is prices are pretty stable around the world and inflation is pretty low, which invites investment.
JOE KERNEN: But do you know -- can you tell us why? So, is it innovation? Is it savings club? Is it demographics?
DAVID MALPASS: No. I do have strong views on that, that inflation usually comes from too much money. And so, in the ’70s, remember what the U.S. was doing? It was spending money both on -- in the ’60s on guns and butter, on military and on social programs at the same time. And so that was not a helpful, workable strategy.
JOE KERNEN: And that’s different today it is?
DAVID MALPASS: That’s different--
JOE KERNEN: It is? With 22 trillion and with Central Banks and QE-Infinity and these low rates? It seems like we ought to --
SENATOR RICK SCOTT: Trillion-dollar deficits.
JOE KERNEN: Yeah. That sounds like it is ripe for inflation. Why are we here?
DAVID MALPASS: I want to go to developing countries. A lot of them have made remarkable strides in stabilizing their own situation and bringing inflation down. And that’s the building block for more investment. And so, I think we can focus on that from the -- from Central Banks doing good jobs, you have the chance to create or to create an environment that allows a lot of growth. That’s what we’re working on in Egypt or aspire to in Pakistan where they had a big problem with devaluations, with weakness of currency and with high inflation. If you can break that spiral, then you can get a better life. India, think about that, of over a billion people that are operating with an actual currency that functions and that is dependable, somewhat dependable for the people. Those are big achievements.
JOE KERNEN: So, you’re -- the most important thing for the entire globe is growth. Are you optimistic that we’re in a good growth environment? We have things set up well?
DAVID MALPASS: No, I’m optimistic about people and about if there are good policies, you can get ahead. That is -- that I think is true. But global growth has slowed. We lowered our forecast to 2.6% in early in June. And then in particular Europe has slowed quite substantially. And so, from the standpoint of developing countries, that has a negative impact because they’re physically many of them are close to Europe. And also, investment in developing countries has slowed, which is a problem for the future.
ANDREW ROSS SORKIN: They’re playing us out. But I have one World Bank sort of out of left field question, because we’ve been talking about bitcoin all morning. So many of these developed countries or developing countries, that’s where people are using bitcoin. But there is also a question of whether governments ultimately will clamp down on this. What do you think is going to happen?
DAVID MALPASS: So, also, they’re using mobile banking and that’s been a liberating factor for a lot of people. And it just – it depends on the different systems in different countries. If the governments allow it, you can get a lot of financial inclusion--
ANDREW ROSS SORKIN: What your long-term handicapping of this? Because the one thing that countries have historically had a monopoly on is currency. And I don’t know how quickly they’re going to want to give that up.
DAVID MALPASS: I’m not sure bitcoin or blockchain is as important as the liberalization of an internal market that allows people to hold money of real value.
JOE KERNEN: David Malpass, thank you.
DAVID MALPASS: Yeah. Thank you.
