The World Bank chief on Donald Trump

Global Trade & Policy Shifts

• The election of Donald Trump as the 47th U.S. president is expected to drive higher tariffs, likely prompting retaliatory measures from other nations, though a full-scale "1930s style" war is deemed unlikely.
• The global trading system is undergoing a structural shift away from 12-nation just-in-time assembly models toward nearshoring and friendshoring.
• COVID-19 acted as the primary accelerator for this transition, which had already been underway prior to the pandemic.
• Future business models will increasingly rely on regional and bilateral trade deals rather than purely multilateral frameworks.
• Tariffs and the Inflation Reduction Act (IRA) are being utilized as tools to stimulate domestic American investment, production, and job creation.

Development Strategy in the Global South

• African manufacturing and job creation are forecast to depend heavily on local and regional consumption rather than solely on global export markets.
• The World Bank views climate resilience as integral to development outcomes; for instance, designing primary healthcare facilities to be weather-resilient simultaneously achieves adaptation and development goals.
• There is no inherent theoretical trade-off between mitigation and adaptation; in practice, integrated project design can deliver both.

Climate Finance Targets & Allocation

• Climate-related financing now comprises 44% of the World Bank's total funding (across IBRD, IDA, and IFC), up from a historical baseline of 34-35%.
• The Bank has set a target to reach 45% climate financing by 2025, maintaining an equal split between mitigation and adaptation efforts.
• Adaptation is prioritized for emerging markets, which often contribute less to emissions but face disproportionate challenges from weather events.
• Current funding levels remain inadequate relative to the total needs of global development goals and job creation.

Private Sector Mobilization & Barriers

• The World Bank identifies four primary barriers preventing the private sector from investing heavily in climate mitigation:
  • Lack of regulatory and policy certainty.
  • Absence of political risk guarantees.
  • Insufficient project profitability for private investors.
  • Lack of foreign exchange hedging markets for long-term (30-year) investments.
• The Bank is actively addressing these barriers through:
  • Expanding MIGA guarantees, which have doubled in volume over the last 18 months.
  • Taking "first loss" junior equity positions to improve project profitability and attract private capital.
  • Increasing local currency financing; IFC now executes nearly 33-35% of its financing in local currency via swap deals with commercial banks.

Nuclear Energy & Technology Policy

• The Board has engaged in detailed discussions regarding the future of nuclear energy, gas, geothermal, solar, and wind investments.
• Current policy does not finance traditional nuclear projects due to high costs and a mandate to act as a development institution rather than a venture capital firm.
• The Bank is not ideologically opposed to nuclear energy; however, it awaits commercial viability and proven technology, specifically Small Modular Reactors (SMRs).
• Investment in emerging energy technologies like SMRs is deemed premature for the Bank until they are commercially established.