The raging conflict between Israel and Palestine could deal a "serious" blow to global economic development, the president of the World Bank said Tuesday.
Addressing an investor conference in Saudi Arabia, Ajay Banga said that geopolitical tensions heightened by the Middle East conflict pose the biggest threat to the world economy, but that risks "tend to move around" fast, so others should not be ignored.
"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," 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."
Banga said that while everything in the developed world looks better than had been expected some time ago, "I think that we're at a very dangerous juncture."
More than 5,000 Palestinians, mainly civilians and mostly children, have been killed across the Gaza Strip in massive Israeli bombardments after the Palestinian resistance group Hamas launched a surprise attack against Israel on Oct. 7. Some 1,400 people are said to have been killed in Israel.
Banga was speaking at the annual Future Investment Initiative (FII), often referred to as "Davos in the Desert."
More than 6,000 delegates are registered for the three-day event that will feature appearances by global banking chiefs and the presidents of South Korea, Kenya and Rwanda, organizers said.
Banga said geopolitics pose the biggest, but are not the only risk to the world economy.
"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," he said, referring to a rise in the benchmark for borrowing costs around the world, which further threaten an economic slowdown.
"And then, how long before the next pandemic?" Banga noted.
He said private sector investment is needed in developing economies but political risks in some of these countries remain a barrier.
Some "1 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."
Regional conflict fears
The shocking violence in Israel and Gaza stands in stark contrast to the vision of a more stable and prosperous Middle East championed by Saudi Arabia, which this year rebuilt ties with Iran and was in talks toward recognizing Israel before the fighting broke out.
Saudi Arabia has in recent weeks condemned violence against civilians in Gaza and affirmed its support for the Palestinian cause.
A source familiar with discussions on possible normalization with Israel told Agence France-Presse (AFP) this month that the process had been paused.
The conflict comes halfway through the Vision 2030 reform agenda championed by the kingdom's de facto ruler, Crown Prince Mohammed bin Salman (MBS), which is intended to transition the world's biggest crude oil exporter away from fossil fuels.
Saudi officials have signaled they intend to forge ahead with their reform plans despite fears of wider regional turmoil.
In addition to FII, the capital this week is also hosting its first fashion week and a boxing match between Tyson Fury and Francis Ngannou.
On Monday, MBS announced plans to host the first eSports World Cup next summer.
The FII opening ceremony featured a vocal performance by Britain's Got Talent contestant Malakai Bayoh as a giant dove flashed on a screen behind him.
Yasir Al Rumayyan, governor of the Saudi Public Investment Fund, referred only obliquely to the Israel-Palestine conflict in his comments on Tuesday, though he did warn about challenges presented by high interest rates.
"As central banks have tightened monetary policy in an effort to slow inflation, business and governments around the world have been adjusting to this new reality. This has been the fastest rate increase since the early 1980s and has caused significant and unpredictable disruptions," he said.
Yet, he voiced optimism that "even in a high interest rate environment we can see the acceleration of growth and productivity."