The President of the World Bank, Ajay Banga has stated that geopolitical tensions across the world pose serious risks to the global economy.
Mr Banga stated this while speaking at the opening ceremony of the Future Investment Initiative (FII) in Riyadh, Saudi Arabia.
The President noted that events such as the war in Gaza pose serious risks to the well-being of the global economy.
He said,
- “And then, how long before the next pandemic? There is so much going on in the world and geopolitics in the wars that you’re seeing and what just happened recently in Israel and Gaza.
- At the end of the day, when you put all this together, I think the impact on economic development is even more serious,”
- “So I would be very careful of fixating on one and ignoring the others right now. I think that we’re at a very dangerous juncture.”
Speaking further, Mr Banga said the 5% yield of the U.S Treasury yesterday was a sign of an impending slowdown in the global financial system since it was an unusual occurrence.
In his words,
- “The U.S. 10-year Treasury (yield) just crossed 5% briefly yesterday, these are areas we haven’t seen. So yes, that is right there lurking in the shadows,”
Need for private sector funds
He noted that political risks in developing and emerging economies deter the much-needed private sector investment to meet renewable energy goals.
He emphasized the paucity of funds in the coffers of governments and multilateral institutions and the importance of the private sector.
His words were,
- “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. And that is the biggest task we have ahead of us.”