The World Bank reduced its global economic growth forecast for 2026 to 2.5%, down from 2.6% in January and the slowest pace since the COVID-19 pandemic in 2020, according to its June 11 Global Economic Prospects report [1, 2, 3, 4, 5, 6, 7, 8, 9, 10]. The downgrade followed US and Israeli strikes on Iran on February 28, which triggered the current Middle East conflict disrupting key energy supplies and regional stability [2, 6].
The forecast assumes an average Brent crude oil price of $94 per barrel in 2026, representing a 36% jump from 2025 levels, driven by the closure of the Strait of Hormuz — the largest energy supply disruption in 50 years — and other conflict-related disruptions [2, 3, 4, 5, 6, 8, 10]. Rising oil and fertilizer prices have pushed global inflation expectations up to 4.0% in 2026, from 3.3% last year [2, 3, 4, 5, 6, 8, 10].
About two-thirds of economies worldwide have had their growth outlooks downgraded, especially developing countries and those in the Middle East directly affected by the conflict [1, 2, 3, 4, 5, 6, 8, 9, 10]. Growth for developing economies is forecast to slow sharply to 3.6% in 2026, down from 4.4% in 2025 — a post-pandemic low [3, 5, 8, 10]. Gulf economies caught in the conflict are expected to see growth fall from 3.9% in 2025 to near zero in 2026 [5, 8, 9, 10].
The World Bank warned that if energy supply disruptions worsen and financial markets face additional stress, growth could plunge further to 1.3%, with inflation rising to 4.4% [2, 3, 4, 5, 6, 8, 11, 10]. Under a moderate disruptions scenario, growth could slow to 2.1% with inflation also hitting 4.4% [2, 3, 4, 5, 8, 11].
Ayhan Kose, World Bank Deputy Chief Economist, said the risk scenarios "show how quickly the outlook could weaken if energy and financial pressure reinforce each other" [2]. He also emphasized that "the global economy has not fallen off a cliff but slowing sharply, with many developing countries facing fewer resources to respond and weaker resilience to shocks" [9]. Despite the challenges, Kose urged seizing the moment to strengthen policy frameworks and mobilize private capital for infrastructure and jobs [5].
Looking ahead, growth is projected to recover moderately to around 2.8% in 2027 and 2028 but remain below the average rates seen during the 2010s [2, 5, 6, 10]. China’s economy is expected to grow near 4.2%-4.3% over 2026-2028, supported by policy stimulus and exports despite domestic headwinds like the real estate adjustment [5, 8]. South Asia remains the fastest growing region but is projected to slow from 7% in 2025 to about 6.3% in 2026 [5].
The World Bank announced it is ready to deploy $50 to $60 billion in immediate financial support using existing instruments and could scale this to $80 to $100 billion over 15 months if the crisis prolongs [5, 10].
