WASHINGTON Nov 12 Emerging markets are likely
to see considerably more impact from higher U.S. interest rates
when the Federal Reserve pulls back from its massive monetary
stimulus, World Bank President Jim Yong Kim said on Tuesday.
Fed chief Ben Bernanke shocked emerging markets in May when
he raised the possibility that the U.S. central bank could soon
embark on a draw-down in its bond-buying program, known as
"We think we've seen about a third of the overall increase
in interest rates responding to that first announcement," Kim
said in a briefing with reporters.
The Fed surprised financial markets in September by opting
not to reduce its $85 billion per month bond-buying pace. But
economists think signs of vigor in the U.S. job market will lead
the central bank to make a move by early next year.
Thailand, Malaysia and Indonesia were particularly hard hit
by capital outflows after Bernanke's comments, as investors bet
on higher rates in the United States. Kim said the fallout was
partly driven by domestic weaknesses.
Higher U.S. rates would make it harder for emerging markets
to get access to capital for investments, including addressing
about a $4.3 trillion infrastructure deficit in their economies,
"As U.S. interest rates go up, what we're going to see is it
will be even more difficult to get access to the kinds of
capital for infrastructure investments that developing economies
need," Kim said.
The World Bank has made funding "transformative"
infrastructure projects a key part of its new strategy since Kim
came to the helm of the poverty-fighting institution last year.
The bank plans to bring together its investment guarantees, the
private sector and governments to build more massive
infrastructure projects, such as power plants in Africa.