World Bank President Warns of Consequences from Middle East War: Global Economy May Slow Due to Rising Inflation – Ajay Banga

Ajay Banga, the President of the World Bank, recently made a crucial statement regarding the consequences of the war in the Middle East, emphasizing that this conflict could substantially affect the growth of the global economy. He noted that even if the war were to end swiftly, the repercussions would still be felt in the form of slowed economic growth and increased inflation.

In his address, which was published in a Reuters article, Banga highlighted that the severity and duration of disruptions in energy markets play a pivotal role in determining the consequences of the war. He pointed out that a quick resolution to the conflict could help normalize the situation within the next few months, while a prolonged conflict could extend negative repercussions for an additional six to eight months.

Banga also underscored that inflation could shift by 0.9 percentage points as a result of these events. “As an organization, we can assist because we have certain response mechanisms that we refer to as crisis response windows,” he stated, referring to World Bank rules that allow countries to request rapid access to 10% of unused funds from previously approved programs.

It is noteworthy that countries affected by the war could access approximately $30 billion through these “crisis windows” within the next two to three months. Over a six-month period, this amount could rise to $70 billion. However, Banga cautioned that countries should be careful in providing subsidies that they cannot afford, as this could lead to even greater problems in the future.

It is important to recall that it was previously reported that Iran rejected a proposal to end the war with the United States and Israel. Tehran intended to unblock the Strait of Hormuz for a ceasefire, but is currently not agreeing to set deadlines as it considers the proposal. Media reports indicate that Washington is not prepared for a permanent truce.

The United States and Iran, with the help of intermediaries, have discussed the terms of a potential 45-day ceasefire that could lead to a definitive end to the war. The intensity of traffic through the Strait of Hormuz has surged to its highest level since the onset of the war against Iran. Over the course of two days, 21 vessels passed through the strait, 13 of which were headed to the Arabian Sea.

On the night of April 8, U.S. President Donald Trump announced that he had agreed to suspend bombings of Iran for two weeks on the condition of the immediate opening of the Strait of Hormuz. He emphasized that the agreement entails a bilateral ceasefire. Subsequently, Iran's Supreme National Security Council confirmed the agreement for a two-week ceasefire with the United States, noting that the agreement was made with the consent of Iran's new Supreme Leader Ayatollah Mojtaba Khamenei.

Following this, both the United States and Iran declared victory after concluding the two-week ceasefire agreement. Soon after, Israel also joined the two-week ceasefire, indicating the possibility of achieving a more lasting peace in the region.