Ajay Banga says the war in the Middle East will slow global economic growth and push inflation higher, regardless of how quickly the conflict ends.
Speaking at an event hosted by the Atlantic Council ahead of next week’s meetings of the World Bank and International Monetary Fund, Banga said the scale of the impact would depend on disruptions to energy markets.
“A rapid end to the conflict would allow some normalization in the coming months, while a prolonged conflict could extend the impact for six to eight months,” he said.
Banga added that global GDP growth, previously estimated at 2.83%, could decline by 0.3–0.4 percentage points in a baseline scenario and by over 1 percentage point in a more severe case. Inflation could rise by up to 0.9 percentage points, he said.
The World Bank chief noted that the institution can quickly provide financial support to affected countries through its “crisis response windows,” similar to measures used during the COVID-19 pandemic.
According to Banga, countries could access around $30 billion in funding over the next two to three months, with up to $70 billion available within six months.
He also warned governments against introducing unaffordable subsidies, saying such measures could worsen fiscal challenges in the long term.
