World Bank President Ajay Banga, speaking at the Future Investment Initiative (FII) conference in Riyadh, highlighted that the escalation of geopolitical tensions resulting from the Middle East conflict poses a significant threat to the global economy. Banga emphasized the need to seize available opportunities to foster international collaborations and devise strategies that will shape the economy of tomorrow.
Referring to the recent rise in the U.S. 10-year Treasury yield, which briefly surpassed 5 percent, Banga expressed concern about this uncharted territory He highlighted that such developments, along with the corresponding increase in borrowing costs worldwide, pose a significant threat to the global economy, further intensifying the risk of an economic slowdown.
“And then, how long before the next pandemic?” Banga said.
Risks tend to move around, he said. “So I would be very careful of fixating on one and ignoring the others right now.”
In light of the current circumstances, Banga noted that although the developed world appears more favorable than anticipated previously, he expressed a cautious perspective, stating, “I think that we’re at a very dangerous juncture.”
Highlighting the importance of private sector investment in developing economies, Banga acknowledged that certain countries still face barriers due to political risks.
“One trillion of dollars is needed just for renewable energy in the emerging markets. There is not enough money in government coffers or even in the multilateral development banks, we need to involve the private sector with their capital,” he said. “And that is the biggest task we have ahead of us.”
Read more: Ajay Banga elected as new President of the World Bank
New partnership
In a related development, the World Bank announced a new partnership with the Islamic Development Bank aimed at creating a positive impact and enhancing the well-being of individuals in the Middle East and North Africa (MENA) region.
The collaboration aligns with the World Bank’s fresh approach to development, emphasizing the importance of coordinated global action, transformative partnerships, and enhanced impact.
The partnership includes bolstering the effective management of water, energy, and food resources in the midst of climate change and fragility challenges, empowering women and youth with skills to thrive in employment and actively engage in the digital transformation, and fostering increased regional and cross-border trade and cooperation.
Anticipated to facilitate collaborative endeavors, the deal aims to mobilize financing of up to $6 billion by 2026.
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