MARRAKESH, Morocco, Oct 10 (Reuters) – The Israel-Gaza conflict is an unnecessary global economic shock, World Bank President Ajay Banga said on Tuesday, adding that if the conflict escalates, central banks in many countries could enter a soft landing. said that it would be difficult to achieve.
“This is a humanitarian tragedy and an economic shock that we don’t need,” Banga told Reuters on the sidelines of the World Bank/International Monetary Fund annual meeting in Morocco.
Banga said the central bank was “starting to feel a little more confident that there is an opportunity for a soft landing, but this is becoming more difficult.”
Banga said the immediate economic impact of the Israel-Gaza conflict would be less than it was at the start of Russia’s invasion of Ukraine last year, as it had not affected oil, grain or fertilizer exports.
But it travels through the financial markets and causes dollar assets to suddenly rise, he said. Banga said inflation has fallen in recent months, prices and wages have stabilized, and markets are getting used to the idea that interest rates will remain high for an extended period of time, adding that another prolonged conflict could threaten these dynamics. He added that there is a possibility of it collapsing.
“It’s all a side effect. It doesn’t feel good,” Banga said.
Mr. Banga said the World Bank had temporarily suspended its operations in the Gaza Strip and evacuated many staff as it became a “war zone,” but continued to operate in the Palestinian territories in the West Bank. He said it is continuing.
He said the European Union initially “made the mistake” of announcing a cut off of all aid to the Palestinian territories in response to Hamas’ attacks on Israel, which was later reversed, leaving political solutions to other countries. of the dispute, he added, adding that he intends to leave it to him.
“I’m in the development business, and people in the development business feel that at the end of the day, after this is all done, places need to be helped,” he said. “And we will do our best to help.”
Report by David Lawder.Editing: Allison Williams and Christina Fincher
Our standards: Thomson Reuters Trust Principles.