World Bank: Main Risks To Global Growth Stem From Geopolitics

Following the warning from the International Monetary Fund, the World Bank is also sounding the alarm. “Geopolitical tensions pose the greatest threat to the global economy,” said new World Bank President Ajay Banga at the annual Future Investment Initiative (FII) forum in Riyadh, Saudi Arabia.

According to Banga, the risks are “multiplying and tend to move quickly” and involve more and more countries around the world: from the Russian-Ukrainian armed conflict to the war between Israel and Hamas and growing tensions in Asia, particularly between China and the Philippines, which are competing for control of the South China Sea. Two clashes between Philippine and Chinese ships involving the respective coast guard units took place there on Sunday.

And as if all this were not enough, Banga asked the question, “How much time left” until the next pandemic? “There is so much that needs to be done globally and geopolitically to try to stabilize tensions in Israel and the Gaza Strip. Ultimately, once all is added up, the impact on economic development is believed to be more severe than expected,” Banga explained. His assessment leaves little room for optimism about global growth: “Even if things in the developed world look better than we expected some time ago, I really think we are at a very dangerous moment.”

Banga, a 63-year-old Indian, was appointed in May at the suggestion of US President Joe Biden to head the World Bank, an international lending institution that fights for economic development of the poorest countries. According to Banga, “elements of risk to growth” stem from the current international environment and the many open crises, as well as from the difficulties of individual countries such as China that until recently was the driving force of the global economy.