Key facts
- The World Bank forecasts global economic growth to slow to 2.5% this year.
- The slowdown is attributed to the Iran war's impact on energy prices and increased uncertainty.
- Developing and emerging market countries are expected to see growth cut by 0.4 percentage points to 3.6%.
- The U.S. economy is projected to grow 2.2% this year, unchanged from previous forecasts.
- China's economic growth is forecast at 4.2% for the year.
- India is expected to grow 6.6% this year, while the Eurozone is projected to grow 0.8%.
The World Bank has significantly lowered its global economic growth forecast to 2.5% for the current year, citing the economic fallout from the Iran war, which has led to higher energy prices and increased uncertainty. This marks the weakest global performance since the COVID-19 pandemic.
The bank has downgraded growth forecasts for two-thirds of the world's countries. Developing and emerging market countries are expected to see their growth cut by 0.4 percentage points to 3.6%, with the disruption in energy supplies and price increases dampening confidence and economic activity.
Despite the global slowdown, the United States economy is projected to grow 2.2% this year, unchanged from its January forecast. The World Bank attributes this resilience to the U.S. being a major energy producer, benefiting from tax cuts, and booming investment in artificial intelligence.
China, the world's second-largest economy, is expected to grow 4.2% this year, a decrease from previous forecasts. India is anticipated to remain the world's fastest-growing major economy, with a projected expansion of 6.6%, though this is down from earlier projections. The Eurozone countries are collectively expected to achieve only 0.8% growth.
The conflict in the Middle East has also impacted energy markets, with Iran reportedly closing the Strait of Hormuz. The World Bank forecasts the price of Brent crude oil to average $94 a barrel this year, a substantial increase from previous estimates.