Key facts
- Global growth is forecast to slow to 2.5% in 2026, down from 2.9% in 2025.
- This is the lowest growth rate since the COVID-19 pandemic.
- The Middle East conflict has disrupted energy markets, closing the Strait of Hormuz.
- Brent crude oil prices are projected to average $94 a barrel in 2026.
- Global inflation is expected to rise to 4.0% in 2026.
- The World Bank Group is ready to provide up to $100 billion for affected countries.
The World Bank Group's latest Global Economic Prospects report forecasts a significant slowdown in global growth for 2026, projecting it to reach 2.5%, the lowest rate since the COVID-19 pandemic. This deceleration is primarily attributed to the ongoing conflict in the Middle East, which has severely disrupted energy markets and triggered a new wave of inflation.
The closure of the Strait of Hormuz, a critical chokepoint for oil and fertilizer shipments, is a major factor. Brent crude oil prices are expected to average $94 a barrel in 2026, a substantial increase from 2025 levels. This, coupled with soaring fertilizer prices, is pushing global inflation upwards, with a forecast of 4.0% for 2026, up from 3.3% in the previous year.
The report highlights that economies directly affected by the conflict, particularly those in the Gulf region, are expected to experience a sharp decline in growth, potentially nearing zero in 2026 before a projected rebound in subsequent years as trade and reconstruction efforts commence. Developing economies as a whole are also facing slower growth, with projections indicating a drop to 3.6% in 2026, hindering progress in narrowing income gaps with advanced economies.
In response to these challenges, the World Bank Group is mobilizing significant financial resources. It is making an initial $50–60 billion available through existing instruments and has committed to scaling up support to $80–100 billion over 15 months if economic pressures deepen. This funding aims to bolster social safety nets, enhance fiscal capacity, and provide crucial liquidity to firms and farms in affected countries.
Downside risks remain substantial. The report warns that more severe disruptions to energy supplies or significant financial stress could further reduce global growth to 1.3% and push inflation to 4.4%. The World Bank also notes that efforts to end the conflict are allegedly being undermined, contributing to the persistent uncertainty.