World Bank’s Banga says geopolitics pose biggest, but not the only, risk to world economy By Reuters

© Reuters. FILE PHOTO: Ajay Banga, World Financial institution president, participates in world infrastructure and funding discussion board in New York, Thursday, Sept. 21, 2023. Seth Wenig/Pool by way of REUTERS/File Photograph

By Jorgelina do Rosario

LONDON (Reuters) -Geopolitical tensions heightened by the Center East battle pose the largest risk to the world financial system proper now however different dangers are additionally at play, World Financial institution President Ajay Banga mentioned on Tuesday.

“The U.S. 10-year Treasury (yield) simply crossed 5% briefly yesterday, these are areas we have not seen. So sure, that’s proper there lurking within the shadows,” Banga mentioned, referring to an increase within the benchmark for borrowing prices all over the world which additional threaten an financial slowdown.

“After which, how lengthy earlier than the subsequent pandemic?” Banga mentioned throughout an occasion on the annual Future Funding Initiative (FII) in Riyadh.

“There’s a lot occurring on the planet and geopolitics within the wars that you just’re seeing and what simply occurred just lately in Israel and Gaza. On the finish of the day, whenever you put all this collectively, I believe the affect on financial improvement is much more severe,” he mentioned.

Dangers have a tendency to maneuver round, he mentioned. “So I might be very cautious of fixating on one and ignoring the others proper now.”

Banga mentioned that whereas all the things within the developed world appears to be like higher than had been anticipated a while in the past, “I believe that we’re at a really harmful juncture.”

He mentioned non-public sector funding is required in creating economies however political dangers in a few of these international locations stay a barrier.

“One trillion of {dollars} is required only for renewable vitality within the rising markets. There’s not sufficient cash in authorities coffers and even within the multilateral improvement banks, we have to contain the non-public sector with their capital,” he mentioned. “And that’s the greatest activity now we have forward of us.”