World Bank's Kim: Growth Slowing for Emerging Markets

The Bretton Woods Committee web site runs this article quoting World Bank Presdent Kim as agreeing with the IMF that there are risks to growth for emerging markets. Below is the article that appears here. After that some comments.

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World Bank's Kim: Growth slower for emerging markets

CNBC, Oct 2, 2015 
by Fred Imbert

Jim Yong Kim said Thursday that emerging markets will experience slower growth in the near future.
"There are a lot of headwinds," the World Bank president told CNBC's "Squawk Alley." "A big part of it is the fact that commodity prices are down and continue to be down, and a lot of it has to do with the slowing growth rate in China."

Earlier on Thursday, the Caixin/Markit PMI index showed manufacturing in the region dropped to a new 6 1/2-year low of 47.2, ticking down from August's reading of 47.3 but still better than an earlier flash estimate of 47.

Kim also said that a possible Federal Reserve rate hike would limit the access to capital for emerging markets. "All these things are giving us a sense that growth will be slower globally, but especially in the emerging markets."

Kim echoed the remarks made by IMF Managing Director Christine Lagarde, who on Wednesday told CNBC that emerging markets will likely see their fifth-consecutive year of declining growth rates.

Still, Richmond Fed President Jeffrey Lacker, a voting member, told The Wall Street Journal that the central bank could still raise interest rates this month.

"I don't see why not," he said. "We will have another labor market report. Presumably that will move us further toward labor market improvement."

The Fed kept interest rates low at its last meeting, a decision that gave emerging markets some breathing room to reform their economies further, Kim told The Associated Press on Sept. 24.

However, Kim warned that raising rates this year could have dire consequences for emerging market economies, especially those tied closely to commodities.

"Any of the oil and gas producers are already in a terrible situation [and] it looks like, to us, that the price will be down for a long time," he said. "And when Iran goes online, we expect the price of oil to go down another $10 a barrel."

U.S. crude prices have fallen more than 45 percent in the last year and over 20 percent in 2015.

Click here to view this article as it originally appeared on CNBC

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My added comments:

To say that comments from US Fed members on raising rates have been confusing is an understatement. Every few days we have one member or another saying that it looks like they should be able to raise rates soon while others say just the opposite. It's very clear from recent public statements from the IMF and World Bank that they do not believe the US Fed should raise rates. It seems like we may have a conflict developing there we need to keep an eye on.

The comment above from Richmond Fed President Jeffrey Lacker appeared in the orginal CNBC article on Thursday before the latest jobs report. One has to wonder what is going on at the Fed in this regard. One day after President lacker is quoted as follows:

Still, Richmond Fed President Jeffrey Lacker, a voting member, told The Wall Street Journal that the central bank could still raise interest rates this month.

"I don't see why not," he said. "We will have another labor market report. Presumably that will move us further toward labor market improvement."

we get a very bad jobs report that in no way moved us "further toward labor market improvement." Is it really possible he had no idea what the report would say until Friday? If so, it would appear whatever models the Fed are using are somewhat useless for making forecasts if they have to wait like we do for the public release of information like this.

Meanwhile. Jim Rickards (who correctly predicted the Fed would not raise rates in September when most predicted they would) not only continues to predict no rise in interest rates, he doubles down and predicts the next move will be easing.

Added note: NY Times article on jobs report