♪♪ >> Hello and welcome to "GZERO World."

I'm Ian Bremmer.

Could a bad year turn into a lost decade?

That's the question we're asking today as economists warn that the long-term global impact of the coronavirus pandemic may be deeper and more severe than expected, unless policymakers take bolder steps right away.

I'm talking about that with World Bank President David Malpass.

>> Even before COVID-19, there was an inequality that was growing in the world.

In order to narrow inequality, we have to have a situation where poorer countries can grow faster than the advanced economies.

>> And then I've got your puppets.

>> Mr. President, he won't leave.

It could be dangerous.

>> I'm going to go in there and give him a piece of my mind, Jack.

But, first, a word from the folks who help us keep the lights on.

>> Major corporate funding provided by founding sponsor First Republic.

At First Republic, our clients come first.

Taking the time to listen helps us provide customized banking and wealth-management solutions.

More on our clients at firstrepublic.com.

Additional funding provided by Prologis -- Global Logistics Real Estate Solutions -- Carnegie Corporation of New York, Harold J. Newman, and by... ♪♪ >> Bretton Woods -- if it sounds like a bucolic forest hamlet in New Hampshire, that's because it is.

It was also the site of a famous conference in 1944 giving birth to a new system of global trade, money, and investment.

>> These meetings are designed to promote trade in the postwar world and to create a foundation for lasting peace.

>> From that gathering of allied nations, we got the institutions known as the International Monetary Fund, or IMF, and the World Bank group.

They were thought of as the twins when first conceived.

Get it?

But the truth is, they don't look all that much alike.

The IMF oversees the international monetary system, the ways that one country can pay another, also helps nations in financial trouble to pay their debts and provides economic policy advice.

The World Bank exists to boost developing nations and eradicate poverty by providing loans and fostering the creation of jobs.

The pandemic has, according to both agencies, only created greater poverty, greater debt, and greater unemployment around the world.

In other words, the poor are getting poorer.

2020 was the first year in two decades that the number of people living in extreme poverty, on less than $1.90 every day, rose around the world.

About 150 million more people now fit that description.

Doesn't tell the whole story, though.

More than 40% of the world's population, 3.3 billion people, live below $5.50 a day, severe poverty, according to the World Bank.

And the more debt poor nations have, the harder it is for their communities to climb into prosperity.

As of December 2020, 50% of the world's poorest countries were at high risk of debt distress.

In total, the global economy shrank by more than 4% last year -- 4.3%, to be exact.

And when wealthy countries take economic hits, their investment in things like sustainability, climate action, and, yes, poverty reduction starts to dry up.

The rate of economic recovery, even for the wealthiest nations, is going to greatly depend on the speed of vaccine distribution.

In a new annual report.

World Bank President David Malpass warns, "Global cooperation will be key."

The IMF and World Bank have their critics.

Nobel Prize-winning economist Joe Stiglitz even said IMF debt policies can do more harm than good.

But there is no doubt the institutions will play a critical role in the months and years ahead.

Back in 1944, nations banded together to try to put an end to war and political instability borne out of economic insecurity.

Will this coronavirus crisis bring us into a renewed, although perhaps reformed, Bretton Woods moment?

Or will our GZERO world prevent leaders from seeing the forest for the trees?

That's the focus of today's big interview.

David Malpass, President of the World Bank.

So good to see you again.

>> Very good to see you, Ian.

>> Let me start with the news of the day, the news of the week.

You know, the United States is going through unprecedented political turmoil.

You're someone that needs rule of law and needs to impress rule of law upon other countries around the world.

How is this affecting your ability to do your job?

>> Well, it's hard to express the depth of concern.

I was appalled by the developments.

From the standpoint of development -- of world development -- it distracts attention at a time when we need a lot of attention on how to help countries actually develop and get beyond COVID and get back to growth path.

>> And I mean, just to have on record, you're a Trump administration appointee, but you accept that this was a free and fair election and that Biden is the president-elect of the United States?

>> Yes, and I left the Trump administration in April of 2019.

So it's been a full job at the World Bank.

I work for the World Bank and for the shareholders of the World Bank.

And so I'm very focused on how do we get development going?

We'll be working with the Biden administration.

The World Bank has worked traditionally very well with both Republicans and Democrats.

So we look forward to a very good relationship with the Biden administration.

>> Now, the biggest news for you is not what's happening in Washington, it's what's happening around the world.

And that is this persistent pandemic.

Extraordinary contraction hitting every country that you are engaged with.

What is the World Bank able to do, how constrained are you, as we face the economic component of this crisis?

>> I don't think of us as being constrained but being challenged.

So the goal for the World Bank is to interact with each country as best we can in helping them raise living standards.

And principally, right now, that's a response to COVID and to the economic shutdowns that have gone on in 2020.

We started this in April to try to -- in April of 2020 -- to try to be very quick in having resources available to the countries for masks and for personal protective equipment.

And then, in August and September, we wanted to develop quickly the ability to extend that to vaccines.

What that means is assessing, for each country, what they need in order to carry out vaccinations.

That means the computer systems or the check-off systems, the registry of people.

And then as the vaccines begin arriving, we can help purchase them, meaning with both grants and with very low-interest-rate loans.

That's good for the whole world to have more people vaccinated.

So we're working on that.

And I hope that will go relatively quickly in 2021, though, as you know, this is a big challenge for the world to actually deliver vaccines and vaccinate people.

>> Now, the infrastructure clearly, I mean, has been a challenge even here in the United States and in Europe, never mind in countries that don't have anything close to the same healthcare infrastructure.

Where do you see the biggest gaps right now?

What are the biggest open questions as to are they going to get it right or not, as we look ahead to 2021, 2022?

>> You know, it's a variety, and quite a bit of it is technical.

For example, there are so many countries, it would be very helpful to have a standard contract with the various vaccine manufacturers.

And so we're working on that so we can help design a standard contract and then help countries work with their vaccine choices.

You know, they will be choosing safe, approved vaccines, and then to quickly contract and get delivery schedules.

That's proving to be one of the challenges.

How do you get a contract?

How do you get it signed within your country?

And then how do you get delivery schedules from the manufacturers?

>> So, the question right now in the United States is when individuals are getting their vaccinations.

As you look around the world -- the developing world -- how much uncertainty, and what's your timeframe, for what vaccination rollout actually looks like?

>> Unfortunately, much of this may actually occur in the second half of 2021 or even in 2022.

Part of the challenge is, the advanced economies have reserved a lot of the vaccine doses.

There's an international organization called COVAX that's trying to get multiple doses and then have a process to deliver those equitably and fairly to the developing countries.

We work closely with them, but we also have funding available to go directly with the manufacturers if that will accelerate some of the delivery dates.

The availability of vaccine is important and also the readiness of the country to deliver it promptly, once it arrives in country.

Those are the practical challenges.

>> So, to pivot from vaccines to the economy, as you're thinking about your forecasts, I mean, there's a huge difference in how countries are going to rebound economically between second half of 2021 and first half of 2022.

How impossible is it for you economists at the World Bank to do your job with this level of uncertainty?

>> Yeah, well, you don't want to count too much on the accuracy, on the forecasts themselves.

What we've done is a range of outcomes, and that depends on how well the vaccine program works.

Also, the reopening in the developed countries, that's very important.

They provide markets for the developing world.

Think of extremely poor people around the world.

One of the critical variables in their life, over the next two years, is going to be, "When does the developed world really start operating at a more normal process?"

That means imports of food into the advanced economies, much of which comes from developing world.

That's one.

But also tourism is a very important part of this.

And a critical component is remittances.

One of the biggest sources of support for people in poverty around the world is the remittances that comes from their families who may work across the border, in some other country.

And restarting that process is going to be critical in their survival.

Extreme poverty has gone up, and there's also food insecurity that as prices have been rising on food, that creates its own new set of challenges for people in the developing world.

>> This is, I think, the first time I've seen when numbers of extreme poverty -- people around the world in extreme poverty -- that projection is going up very significantly.

Talk about what it means, what life is like for an individual in extreme poverty, and how that's going to be affected in the next year or two years.

>> One measure is extreme poverty, which is people that live on less than $2 a day.

That means not enough food.

That means not healthcare, not education.

So we have over 100 million people sliding back into extreme poverty.

And then another big -- even bigger -- segment of the global population is in what we would call poverty -- severe poverty.

And that means still nutrition problems, stunting problems when children don't get enough food or they don't get enough clean water to be able to grow normally.

And that still is a pervasive problem in the developing world.

So this is the first time in at least 20 years, by our data, that poverty rates have been going up instead of down.

And that's severely concerning.

It has to do with the debt levels.

It has to do with the slow growth, but above all, with the shutdowns in the advanced economies.

>> Now, the debt levels in so many of these developing countries are going up.

Are there countries now that are at the brink of implosion as a consequence of that?

>> There are several countries that are in deep debt distress.

So, Zambia has been in the news with the default.

We're working very closely with Chad right now and with the IMF on ways to have the creditors permit and agree to a dramatic reduction in the level of debt.

Otherwise, the government of the country ends up paying money to creditors that is desperately needed by people for food, for children, for education, for vaccinations, and so on, for the healthcare system.

I should note, with our vaccination program, a lot of it is going to be in the form of grants, and the countries will be able to take advantage of that.

But even then, you need some resources from the government in order to help make the health system in the country operate and function.

And that can't be done if the cash flow is going to creditors.

So we're working with a number of countries to have a deep debt reduction.

In Sudan, which has had severe problems over many decades, they're finally beginning to emerge.

And I'm hopeful, I'm optimistic.

We're already putting substantial aid into Sudan.

And I'm hopeful that we can put much more aid in, in 2021, which will help with that crisis situation.

>> So, I mean, despite the fact that the numbers, in terms of coronavirus, in Sub-Saharan Africa are actually quite low.

I mean, the economic outlook that I'm hearing from you are that.

once again, Sub-Saharan Africa is the part of the world that gets crippled the most greatly when we have a major economic crisis.

>> That's right.

There's been a huge inequality, and there's multiple parts of that.

One is, even before COVID-19, there was an inequality that was growing in the world, of the advanced economies moving up much faster than the poorer economies.

In order to narrow inequality, we have to have a situation where poorer countries can grow faster than the advanced economies.

And that just wasn't happening.

That's a catchup part of the process.

Then, when COVID hit, many of the impacts from COVID hit hardest on the poor people around the world.

Even poor people in advanced economies were severely hurt because they lost their jobs.

But in developing countries, they lost more than their jobs.

Often they lost their access to any kind of education and healthcare, for example.

And then one other point I would make -- the stimulus and the response that was done by the advanced economies tended to make worse the inequality, because the fiscal stimulus often went to existing companies or existing people that had formal sector jobs.

And that left out.

the informal sector economy, and they got hit hard.

They were the people that send remittances back to their family in a developing country, for example.

>> Also hit women a lot harder.

>> Women.

Hit children harder.

And so a big chunk of the stimulus went to people that were already in the top half of the income scale.

>> So, what's your view of debt forgiveness, generally, to the poorer countries, as a consequence of all this?

>> There needs to be a dramatic deep reduction in the amounts of debt on the poorest countries.

That's clear.

Even prior to COVID, there was an overindebtedness for many of the countries because of the the environment leading into it.

The debt had been going up because interest rates were low and there was a reach for yield among bond investors, for example.

So the private-sector debt, even of the poorest countries, went up dramatically.

And then a second factor was China's giant success with its economy, which also showed up as a big expansion of the debt that they were extending to the developing world.

And so that's left the countries with lots of debt and not much ability to repay it.

So I think we have to be looking at deep debt reduction.

And that's what we were doing in 2020, and I think it will extend into 2021.

It's going to take work.

And even the legal systems are set up in a way that, right now, favors the creditors.

And I think we need to look for ways to have a more level playing field.

>> As we look specifically at China, which you mentioned, and you know, the amount of corporate debt on their book -- many of the poorest countries are massively indebted to China -- is there a growing sustainability issue of China's economic trajectory, in your view?

>> You know, China showed, in 2020, its ability to grow even in a year when the world had had massive recessions.

One way that they were doing that is expanding the supply from their economies.

So they exported a lot more.

That buoyed their economy, but it meant that production elsewhere in the world didn't pick up as much.

And so I think there are big challenges for China in how to have more of its growth come from internal demand.

And that means incomes, for example, of working people in China can go up faster than they have been doing.

I think that would be useful both for China and for the world.

As far as the debt, I would take note that the currency has been relatively stable.

As the world suffered this severe recession, currencies in the major economies were more stable than they had been in the past, relative to each other.

And that, I think, helps with the recovery and with the new investment that needs to occur.

>> Now, I haven't asked you yet about climate.

And I mean, obviously, it's not been the single most urgent headline right now, but governments around the world are certainly moving in a much greater degree to make their policies more climate-sustainable.

How do you convince the poorest countries, the developing countries that also have very carbon-intensive energy, that they need to be a part of this, given the economic strains that they are under?

>> What I think we can do, as a practical matter, is try to help each country meet the goals that they establish for their economy that's better for climate.

One chunk --and I want to mention it -- is agrobusiness.

The agriculture sector produces a lot of the greenhouse gas emissions and that can be improved, I think, substantially around the world.

The World Bank is the biggest financier of climate co-benefits and climate investments, and we're expanding that rapidly.

So that's something that I think is going to help.

The reality, though, is most of the carbon dioxide emissions are coming from advanced economies and China.

So as you look at Germany, the U.K., the U.S., Japan, China, and India, the carbon output is still very large.

And so the developing countries, the poorer countries, get the brunt of the impact in terms of climate changes.

And yet they are not the big producers of the huge amounts.

>> Before we close, you know, Biden is clearly a very different president than Trump has been.

Do you think the United States' role in the World Bank is going to change at all -- and if so, how -- with a Biden administration, as opposed to Trump?

>> The World Bank works well with both sides of the aisle.

And so the U.S. is the biggest shareholder in the World Bank.

But the World Bank, as I mentioned, is already the world's biggest financial source for climate change-related investments.

And that means that I think the Biden administration will be consistent and supportive of those efforts.

And I look forward to working with them on a range of topics.

Our focus, the World Bank focus, is good development outcomes for every country.

And that means development outcomes that raise the living standards of people, raise the median incomes, are environmentally sensitive.

And so all of those goals are consistent with, I think, what the major shareholders want, including the United States.

>> 2021 is a pretty challenging year for all of us.

Give us your surprising glimmer of hope for 2021 -- something people may not be thinking about, you think is going to go better than they expect.

>> I'm going to fall back, Ian, on the promise of humanity and of technology, people working together with communication where they can share ideas.

It allows an incredible advance for living standards.

We can wonder, if farmers in poor countries know what farmers in more advanced economies are doing, aren't they going to be able to really increase their yields in a way that's environmentally sustainable and provide food around the world?

That's -- I think it's a problem that can be addressed with knowledge, with cooperation, and with technology.

And the world is well situated to do that, to make big advances.

>> Huge investments in knowledge and technology and innovation going through this pandemic.

No question.

David Malpass, President of the World Bank, thank you so much, sir.

>> Thank you, Ian.

>> On "Puppet Regime" this week, Joe Biden is getting ready to move in to 1600 Pennsylvania Avenue, but it may need a good scrubbing first.

Roll that tape.

>> Finally, I'm all inaugurated and ready to move in to the White House.

>> Mr. President, Sir, you can't go in there just yet.

>> What do you mean?

I'm the president now.

>> Yes, Mr. President.

He won't leave.

It could be dangerous.

>> I'm going to go in there and give him a piece of my mind.

Jack, there's a new sheriff in town.

>> Sir!

No!

[ Door creaks ] [ Footsteps approaching ] >> Why are the lights off in here?

>> Well, well, well, look who it is.

>> Who's that?

What are you still doing in here?

>> You didn't think I'd just leave, did you, Joe?

You owe me.

>> This is just weird.

Let's turn the lights on.

[ Hands clapping ] [ Dramatic music plays ] >> What?

I thought you were done infecting the White House.

>> Oh, no, Joe, I'm not leaving till I get my due from you for all the things I did for you.

>> What kind of malarkey are you talking?

>> Really, Joe?

I wrecked the economy.

I destroyed Trump's reelection chances.

I forced you to stay six feet away from women's hair for a whole year.

>> Oh, man.

Women's hair.

>> I made you, Joe.

>> That's some malarkey.

I won 'cause of my bold ideas for their future.

>> Oh, really?

What ideas are those?

>> Obama's ideas.

Or at least his staff.

Look, what do you want.

>> State.

I want to be secretary of state.

>> No, you got to be qualified, Jack.

>> Fine.

Health and Human Services?

>> What?

No.

>> Why not?

Trump had coal guys running the EPA.

How about the Pentagon?

I certainly know how to invade countries.

Ambassador to China?

I'm from there.

Education secretary -- couldn't be worse than DeVos.

How about Agriculture?

>> Oh, geez, it's gonna be harder to get rid of this guy than y'all thought, isn't it?

>> ♪ "Puppet Regime" ♪ >> That's our show this week.

Come back next week.

And if you like what you see -- and of course you do because otherwise why would we do this?

-- check us out at gzeromedia.com.

♪♪ ♪♪ ♪♪ ♪♪ >> Major corporate funding provided by founding sponsor First Republic.

At First Republic, our clients come first.

Taking the time to listen helps us provide customized banking and wealth-management solutions.

More on our clients at firstrepublic.com.

Additional funding provided by Prologis -- Global Logistics Real Estate Solutions -- Carnegie Corporation of New York, Harold J. Newman, and by... ♪♪