The World Bank lowered its global economic growth forecast for 2026 to 2.5%, down from its 2.6% prediction in January and the 2.9% growth seen in 2025 [1, 2, 3, 4]. The new baseline projects an average Brent crude oil price of $94 per barrel in 2026, up 36% from 2025 levels, with global inflation rising from 3.3% last year to 4.0% next year [1, 2, 3, 4].

The downgrade reflects uncertainties caused by the conflict triggered by US and Israeli strikes on Iran earlier this year, which disrupted Middle Eastern energy supplies and raised fertilizer costs, affecting food prices and inflation worldwide [1, 3, 4]. The World Bank said if energy disruptions worsen and financial market stress intensifies, global growth could slow further to as low as 1.3% in 2026 [1, 2, 3, 4]. Under a scenario of prolonged supply troubles pushing oil prices to $115 per barrel, growth could fall to 2.1% and inflation rise to 4.4% [1, 2, 3, 4]. Ayhan Kose, World Bank Deputy Chief Economist, warned, "These risk scenarios show how quickly the outlook could weaken if energy and financial pressure reinforce each other" [1].

About two-thirds of countries have already seen their 2026 growth forecasts downgraded. Middle Eastern nations including the UAE and Iraq are among the worst affected [1, 2, 3, 4]. Gulf economies directly hit by the conflict are forecast to experience growth near zero in 2026, down sharply from 3.9% in 2025, before recovering to around 5% in 2027-2028 [3, 4]. Developing economies overall are expected to slow to 3.6% growth in 2026 from 4.4% last year, marking their lowest rate since the pandemic [2, 3, 4]. South Asia will remain the fastest growing region but slow from 7% in 2025 to 6.3% next year [3]. East Asia and Pacific growth is forecast to ease to 4.2% from 5%, with China’s momentum slowing [3].

The World Bank has made $50-60 billion immediately available to support countries affected by the crisis, including $25 billion from pre-arranged financing. It said it could scale up financial support to $80-100 billion over the next 15 months if needed [3, 4]. Kose added, "The conflict has impacted global economic activity, but every crisis brings opportunity. This moment should be used to strengthen policies, invest in infrastructure, accelerate reforms, and mobilize private capital for large-scale jobs" [3].

The baseline growth forecast assumes the worst energy supply disruptions will ease by the end of July 2026. Global growth is then projected to improve to 2.8% in 2027 [1, 2, 4].