The World Bank Group has warned that the ongoing conflict in the Middle East is expected to slow global economic growth to its lowest level since the COVID-19 pandemic.
In its latest Global Economic Prospects report, the World Bank forecasts global growth to decline to 2.5 percent in 2026, down from 2.9 percent in 2025, citing rising energy prices, higher inflation, and increased borrowing costs.
The report notes that growth forecasts for nearly two-thirds of the world’s economies have been downgraded compared to projections issued in January. While global growth is expected to recover slightly to 2.8 percent in 2027, it would still remain below the average growth rates recorded during the 2010s.
According to the World Bank, disruptions caused by the closure of the Strait of Hormuz have severely affected global energy markets. Brent crude oil prices are projected to average US$94 per barrel in 2026, approximately 36 percent higher than 2025 levels, assuming the worst supply disruptions ease by July.
The report also forecasts a significant increase in fertilizer prices, which could contribute to higher global food costs and push inflation to 4.0 percent in 2026, compared to 3.3 percent in 2025.
The World Bank cautioned that downside risks remain substantial. If energy supply disruptions intensify and are accompanied by financial market stress, global growth could fall further to 1.3 percent in 2026, while inflation could rise to 4.4 percent.
Growth in developing economies is projected to slow to 3.6 percent in 2026 from 4.4 percent in 2025 before recovering to 4.2 percent in 2027.
Among regions, economies in the Gulf directly affected by the conflict are expected to experience the sharpest slowdown, with growth falling from 3.9 percent in 2025 to near zero in 2026. However, growth is forecast to rebound strongly from 2027 onwards as trade recovers and reconstruction efforts begin.
The World Bank also announced that it is prepared to make between US$50 billion and US$60 billion immediately available through existing financing instruments to help countries respond to the crisis, including US$25 billion in pre-arranged funding.
The institution further noted that if the conflict and its economic consequences persist, support could be expanded to between US$80 billion and US$100 billion over the next 15 months.
The report also highlighted growing concerns over rising debt levels in developing economies. According to the World Bank, aggregate government debt in developing countries has increased from below 40 percent of GDP in 2010 to more than 70 percent today, limiting their ability to respond to future crises and invest in long-term development priorities.
Source: Anadolu Agency
