The World Bank on Monday told staff it was gravely concerned about the “shocking escalation” of violence in the Israeli-Palestinian conflict as the fighting cast a pall over the start of the bank’s annual meetings with the International Monetary Fund in Morocco.
An internal World Bank memo seen by Reuters cited a “devastating loss of life, destruction and heavy toll on civilians being incurred on both sides,” but voiced support for the lender’s work in Gaza and the West Bank.
“We hope for a rapid de-escalation of the conflict and end to the violence. The World Bank and our development partners have long worked to support the poorest, most vulnerable people in the West Bank and Gaza, and we remain committed to building the foundations for a more stable and sustainable future.”
The Oct. 9-15 annual meetings in Marrakech are expected to focus heavily on increasing resources for both the IMF and the World Bank, but the attention of many government officials on the first day turned to the possibility of a wider conflict.
“We’re all just very much taken aback by the magnitude of the casualties on both sides,” Anna Bjerde, the World Bank’s managing director of operations told Reuters in an interview.
The conflict already has spiked oil prices and prompted a rush into safe haven assets such as gold, which could hurt developing economies.
World Bank chief economist Indermit Gill told Reuters that the conflict could add to a large catalogue of risks already facing the global economy, including fragmentation of trade, especially if it resurrects supply chain delays that sent prices higher during the Covid-19 pandemic.
“It’s in a very trade sensitive part of the world,” Gill told Reuters, adding that another risk was the conflict would drive up headline inflation, with potential knock-on effects for monetary policy that could hit developing countries hardest.
“Right now the most pressing thing is inflation, if you start to see fuel prices go up and goods prices go up because of these logistic jams, this will just compound the problems,” he said.
Gill said he worried the violence could overshadow important discussions planned at this week’s annual IMF-World Bank meetings about sovereign debt, mediocre growth prospects and the big setback for development caused by the Covid-19 pandemic.
“It’s always the low-income countries that you take attention away from, and there are 750 million people who live there.”