The latest
The World Bank has lowered its forecast for global economic growth in 2026 to 2.5%, down from 2.6% projected earlier this year, warning that fallout from the war involving Iran and the resulting disruptions to energy markets and global trade will continue to weigh on economic activity.
The bank raised its estimate for global growth in 2025 to 2.9% from 2.7% in its January outlook. However, it expects momentum to slow next year as inflationary pressures persist and energy and fertilizer costs remain elevated.
Details
• The World Bank downgraded growth forecasts for roughly two-thirds of the world’s economies.
• The Middle East recorded the largest downward revision due to weaker energy exports and supply-chain disruptions.
• Growth in developing and emerging economies is now expected to reach 3.6%, the weakest level since the COVID-19 pandemic.
• Brent crude is forecast to average around $94 a barrel in 2026, about 36% higher than the previous year.
• The bank warned that prolonged supply disruptions in the Gulf could push global growth down to just 1.3% under a more severe scenario.
• Global inflation is projected to rise to around 4% in 2026.
• Fertilizer prices could increase by as much as 38%, adding further pressure to food costs across many developing countries.
What to watch
Markets will be closely watching energy supplies and shipping flows through the Gulf. The World Bank says any further escalation could intensify inflationary pressures and significantly weaken global growth prospects.
