403
Sorry!!
Error! We're sorry, but the page you were looking for doesn't exist.
World Bank Warns Middle East War to Weigh on Global Economic Growth
(MENAFN) The ongoing war in the Middle East is set to weigh on global economic growth and drive inflation higher, regardless of how swiftly the conflict concludes, World Bank President Ajay Banga said Tuesday.
Speaking at an Atlantic Council event ahead of next week’s Spring Meetings of the World Bank and International Monetary Fund, Banga stressed that the economic fallout hinges on how severely energy markets are disrupted.
He explained that a swift resolution could allow some normalization in the months ahead, whereas a prolonged conflict could prolong economic impacts for six to eight months.
Banga detailed that global growth, which had been forecast at 2.83% before the conflict, could decline by 0.3 to 0.4 percentage points in a baseline scenario, with losses exceeding 1 percentage point if the war endures. He added that inflation could rise by up to 0.9 percentage points.
Finance officials convening in Washington are expected to explore ways the World Bank and IMF can assist nations most affected by surging energy costs and supply chain disruptions, Banga noted.
Highlighting the bank’s capacity to act swiftly, he said, “The World Bank can rapidly disburse funding through its crisis response windows, similar to mechanisms used during the COVID-19 pandemic.” Under these rules, countries can request immediate access to 10% of undisbursed funds from previously approved programs.
Banga projected that nations impacted by the war could tap roughly $30 billion through these crisis windows over the next two to three months, with up to $70 billion potentially available over six months.
He cautioned, however, against excessive fiscal interventions, saying, “Governments [should] avoid deepening fiscal strains through unaffordable subsidies that could create larger economic problems in the years ahead.”
Speaking at an Atlantic Council event ahead of next week’s Spring Meetings of the World Bank and International Monetary Fund, Banga stressed that the economic fallout hinges on how severely energy markets are disrupted.
He explained that a swift resolution could allow some normalization in the months ahead, whereas a prolonged conflict could prolong economic impacts for six to eight months.
Banga detailed that global growth, which had been forecast at 2.83% before the conflict, could decline by 0.3 to 0.4 percentage points in a baseline scenario, with losses exceeding 1 percentage point if the war endures. He added that inflation could rise by up to 0.9 percentage points.
Finance officials convening in Washington are expected to explore ways the World Bank and IMF can assist nations most affected by surging energy costs and supply chain disruptions, Banga noted.
Highlighting the bank’s capacity to act swiftly, he said, “The World Bank can rapidly disburse funding through its crisis response windows, similar to mechanisms used during the COVID-19 pandemic.” Under these rules, countries can request immediate access to 10% of undisbursed funds from previously approved programs.
Banga projected that nations impacted by the war could tap roughly $30 billion through these crisis windows over the next two to three months, with up to $70 billion potentially available over six months.
He cautioned, however, against excessive fiscal interventions, saying, “Governments [should] avoid deepening fiscal strains through unaffordable subsidies that could create larger economic problems in the years ahead.”
Legal Disclaimer:
MENAFN provides the
information “as is” without warranty of any kind. We do not accept
any responsibility or liability for the accuracy, content, images,
videos, licenses, completeness, legality, or reliability of the information
contained in this article. If you have any complaints or copyright
issues related to this article, kindly contact the provider above.
Most popular stories
Market Research
More Story
Comments
No comment