World Economy

Greek contagion risks underestimated: World Bank

Greek deal must get done soon: World Bank
Greek deal must get done soon: World Bank

The risks of turmoil from a cash-strapped Greece should not be underestimated by markets, World Bank President Jim Yong Kim warned on Tuesday.

Talks between Greece and its international lenders for further cash in exchange for reforms have been deadlocked for months, raising concerns about a default and Greece's possible exit from the euro zone.

"Some of the commentary I'm hearing from people who have been through many of these crises is that there are always surprises," Kim told CNBC in an interview aired on Tuesday.

"You think that the market has already calculated the impact of a problem in Greece but you never know, so I would urge everyone at the table to come do as much as they can to come to an agreement that is good for Greece, is good for Europe and will of course be good for the world," he said.

President of World Bank Jim Yong Kim
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Greece Tuesday submitted a new reform plan to its international creditors, a European official told CNBC, as hopes of a deal pushed Greek shares as much as 2 percent higher.

Jitters about the future of Greece have weighed on sentiment in global equity markets, undermined the euro and pushed government bond yields in Greece higher in recent weeks.

Read More Greece could get bailout extension to March 2016: Report

"I'm watching very carefully the possible spill-over effects," said Kim. "Some of the countries we work with closely in eastern Europe for example could have a direct impact (from Greece).

Analysts at Capital Economics said in a note last week that while links between local banks in Hungary and Western Europe have declined in recent years, they remained exposed to a "disruptive Greek euro exit."

Turmoil in Greece could also hurt Romania and Slovakia, Capital Economics said.