World Bank president expresses concern over Israel-Gaza conflict's economic impact 

World BankPresidentAjay Banga has expressed his concerns about the economic repercussions of the ongoing Israel-Gaza conflict, referring to it as an "unnecessary global economic shock".

Speaking on the sidelines of the World Bank-International Monetary Fund annual meetings in Morocco, Banga stressed that the conflict has not only caused a humanitarian tragedy but also has economic implications that the world can ill afford.

"It's a humanitarian tragedy and it's an economic shock we don't need," Banga told Reuters, highlighting the far-reaching consequences of the conflict if it continues to escalate. He pointed out that the conflict threatens to hinder central banks' efforts to achieve soft landings in various economies if it spreads further.

Add WION as a Preferred Source

Banga noted that central banks had been gaining confidence in the possibility of achieving a soft landing before the conflict erupted. However, he maintained that the ongoing situation makes it increasingly challenging for central banks to maintain stability in their economies. He emphasised that the conflict is an unwanted disruption that could have a lasting impact on the global economic landscape.

The World Bank President highlighted that, unlike the initial stages of Russia's invasion of Ukraine last year, the Israel-Gaza conflict does not have a direct impact on the exports of essential commodities such as oil, grains, and fertilisers.

However, Banga pointed out that the conflict's effects are transmitted through financial markets. The sudden rise of dollar assets in response to the conflict could disrupt economic stability. He noted that in recent months, there had been signs of improvement, with inflation decreasing and prices and wages stabilising. Markets had also adjusted to the idea of higher interest rates in the near future. However, another prolonged conflict could upset the dynamics of these positive developments.

While discussing the political aspects of the conflict, Banga mentioned that the European Union initially made a mistake by announcing a complete cut-off of aid to the Palestinian Territories in response to the Hamas attack on Israel. This decision was later reversed. Banga refrained from delving into the politics of the situation, focusing instead on the development aspect. He emphasised the importance of offering support to the affected areas once the conflict subsides.

(With inputs from Reuters)

WATCH WION LIVE HERE