World Bank calls on emerging economies to adopt expansionary monetary policies

SEOUL, Nov. 2 (Yonhap) -- Emerging countries should push for expansionary
monetary policies to shield their economies from the ongoing global financial
turmoil amid falling inflationary pressure, a high-ranking official at the World
Bank said in a recent forum.
During the forum held by the state-run Korea Development Institute in Seoul on
Friday, Justin Yifu Lin, the World Bank's senior vice president, said that
emerging countries, including South Korea, might face rapidly plunging exports, a
decrease in investments and a possible economic crisis in the wake of the
U.S.-sparked financial instability.
Lin is the founder and director of the China Center for Economic Research and
former professor of economics at Peking University. He took the World Bank
position on June 2, 2008.
The forum was held amid increasing concern that the current financial turbulence,
which took a nastier turn after the collapse of major U.S. investment banks in
September, could send the global economy into a recession.
The Chinese professor said that recently falling oil and commodity prices provide
more leeway for emerging countries to take expansionary monetary polices aimed at
stemming the spreading jitters.
He also called for expanding fiscal spending, especially on education, health
care and other social safety nets to help low-income people cope better with
tougher circumstances.
Meanwhile, Lin emphasized the need to establish a "new international financial
architecture" in charge of sharing information and coordinating policies among
countries to tackle the global financial crisis.
The group of seven industrial nations should also be replaced by a group of 20,
including developing and emerging nations, as a new central body to deal with
fast-changing financial circumstances, he added.
kokobj@yna.co.kr
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