World Bank, Israel, Gaza, Palestine, Iran

World Bank warns of serious economic harm amid Gaza escalation

World Bank warns of serious economic harm amid Gaza escalation
World Bank president Ajay Banga said events in Gaza could have a severe impact on global economic growth. / bne IntelliNews
By bne IntelIiNews October 25, 2023

The president of the World Bank, Ajay Banga, cautioned on October 24 about the potential "serious" blow to global economic development due to the ongoing conflict between Israeli forces and Hamas.

There are fears the confrontation between Israel, Hamas, Hezbollah, the Assad regime in Syria and Iran will escalate into a broader regional dispute. As the conflict enters its third week, global financial stakeholders are growing increasingly concerned.

Speaking at an investor conference in Saudi Arabia, Banga remarked: "What has recently transpired in Gaza could have a more severe impact on global economic growth." 

He emphasised: "I believe we are at a critically perilous juncture."

During the annual Future of Investment Initiative conference, Banga noted that the yield on the US Treasury bonds for a 10-year term briefly surpassed 5%.

“The US 10-year Treasury [yield] just crossed 5% briefly yesterday, these are areas we haven't seen. So yes, that is right there lurking in the shadows," Banga said.

"And then, how long before the next pandemic?" he said during the event  in Riyadh.

"There is so much going on in the world and geopolitics in the wars that you're seeing and what just happened recently in Israel and Gaza. At the end of the day, when you put all this together, I think the impact on economic development is even more serious," he said.

"So I would be very careful of fixating on one and ignoring the others right now,” he added.

"One trillion dollars is needed just for renewable energy in the emerging markets. There is not enough money in government coffers, or even in the multilateral development banks. We need to involve the private sector with their capital," he said.

"And that is the biggest task we have ahead of us," the official said.

Earlier, Kristalina Georgieva, the managing director of the International Monetary Fund (IMF), expressed her distress over the Israel-Hamas conflict, describing it as “heart-wrenching”. 

She warned that the clash might darken an already bleak global economic horizon further. Georgieva stated: ”We are closely monitoring the situation and its implications, especially on the oil markets."