Washington: World Bank President Ajay Banga has announced that the ongoing conflict in the Middle East is anticipated to hinder global economic growth and drive inflation upward, irrespective of the conflict's duration.

According to Anadolu Agency, Banga shared these insights during an event organized by the Atlantic Council ahead of the forthcoming Spring Meetings of the World Bank and the International Monetary Fund. He highlighted that the economic implications will largely hinge on the extent and duration of disruptions to energy markets caused by the conflict.

Banga outlined that a swift resolution to the conflict could lead to some economic stabilization in the coming months. Conversely, a prolonged crisis might extend economic disruptions for six to eight months. Prior to the conflict, global growth was projected at 2.83%. However, Banga noted that this could decrease by 0.3 to 0.4 percentage points under a baseline scenario, with a potential decline exceeding 1 percentage point if the conflict persists. Inflation, he added, might surge by up to 0.9 percentage points.

Finance officials convening in Washington are expected to deliberate on how the World Bank and IMF can assist countries most affected by escalating energy prices and supply chain disruptions resulting from the war. Banga emphasized the World Bank's capability to swiftly disburse funds through its crisis response windows, an approach previously utilized during the COVID-19 pandemic. Under this framework, countries can quickly access 10% of undisbursed funds from existing programs.

Banga mentioned that nations impacted by the conflict might access approximately $30 billion through these crisis windows within the next two to three months, with up to $70 billion available over six months. He cautioned governments against exacerbating fiscal strains with unsustainable subsidies that could lead to more significant economic challenges in the future.