World Bank President Ajay Banga Warns of Economic Consequences of Israel-Gaza Conflict

By Andrea Shalal and David Lawder

WASHINGTON (Reuters) – World Bank President Ajay Banga on Tuesday warned that a significant widening of the Israel-Gaza war could lead to major impacts on the global economy, calling the steep loss of civilian lives in the region "unconscionable."

In a Reuters NEXT Newsmaker interview, Banga stated that the war has had a relatively small impact on the global economy so far, but a significant escalation would involve other countries that are larger contributors to global growth, including commodity exporters.

> "First of all, I think this unbelievable loss of life – women, children, others, civilians, is just unconscionable on all sides," Banga remarked. "The economic impact of this war, on the other hand, depends a great deal on how much this spreads."

He emphasized that if the conflict spreads regionally, it could significantly alter economic conditions, as it would draw in larger contributors to the global economy, particularly in minerals, metals, and oil.

Several Western countries are advocating for a ceasefire between Israel and Lebanon, as well as in Gaza. However, the United States, a strong ally of Israel, has expressed continued support and is providing anti-missile systems and troops.

The conflict escalated after a Hamas attack on Israel on October 7, which resulted in around 1,200 deaths and approximately 250 hostages taken to Gaza, as per Israeli figures. Since then, Palestinian health authorities report more than 42,000 Palestinian casualties from the ensuing Israeli offensive.

Israeli operations have also reportedly caused the deaths of at least 2,350 people and left nearly 11,000 wounded in Lebanon over the last year, according to the Lebanese health ministry, and more than 1.2 million people have been displaced.

Banga estimated that the war damage in Gaza is likely in the range of $14-20 billion, with additional destruction in southern Lebanon contributing to regional damage.

As a response to the crisis, the World Bank provided $300 million—six times the usual amount—to the Palestinian Authority to manage the situation on the ground, although Banga indicated that this is only a fraction of what is ultimately needed.

He mentioned that the multilateral development bank has formed a group of experts from Jordan, Israel, Palestine, Europe, the U.S., and Egypt to explore short- and long-term actions if a peace agreement can be achieved.

> "We're going to have to figure out how to have that publicly discussed and debated and then find the resources for it," Banga added, indicating that the endeavor would require both private and public investment.