Prior to serving as the head of the World Bank, Zoellich was a managing director of Goldman Sachs, United States Deputy Secretary of State and US Trade Representative under George W. Bush from February 2001-February 2005.
New Europe (NE): What do you think about the possibility of a ‘no-deal’ for Brexit and what are the key challenges for the global economy this year?
Robert Zoellich (RZ): A ‘no-deal’ Brexit would be a disaster. Obviously, this is for the British people and the Parliament to decide, but this issue is not only important for the EU, but it is a question for the world economy as well.
The second issue is the course of monetary policies. We had about 10 years of extraordinary monetary policies and now there a tendency for people who have lived through an exceptional period for so long to think that this is the norm. Any time you have a tightening cycle, this will always increase the chance for greater risks.
In this case, we are at the end of quantitative easing policies, which left central bankers with the task of having to feel out their way to go. Central bankers are highly confident, even if they sometimes like to convey the image of a wizard, they are, in reality, making it up as they go to.
The Federal Reserve is the leader in this (adjusted monetary policy). But you can also see it in the Eurozone with the ECB. Japan will continue to have a quantitative easing policy. In China, there is a challenge where they are trying to reduce the number of overleveraged banks, but as the economy slows they are looking for ways to expand credit. Let’s see how it will work.
After that, there are some very well known trade issues involving the US, China, the EU, etc, and you also have some of the geopolitical risks.
Full article available: https://www.neweurope.eu/article/where-is-the-worlds-economy-headed-in-2019/