Key facts
- Global growth is forecast to slow to 2.5% in 2026, the lowest rate since the COVID-19 pandemic.
- The Middle East conflict is disrupting commodity flows and driving up energy prices.
- 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 prepared to offer up to $100 billion in financing for affected countries.
The World Bank forecasts global growth to slow to 2.5% in 2026, marking the lowest rate since the COVID-19 pandemic. This deceleration is primarily driven by the ongoing Middle East conflict, which has disrupted commodity flows and triggered a new wave of inflation, particularly in energy prices. The closure of the Strait of Hormuz is a significant factor, contributing to a projected average Brent crude oil price of $94 a barrel in 2026. Global inflation is expected to rise to 4.0% in 2026, up from 3.3% in 2025. The World Bank Group is prepared to offer up to $100 billion in financing for affected countries and is working with 30 nations on response plans.
In the US, inflation accelerated to 4.2% in May, the fastest pace in over three years, largely due to rising energy prices. This has led to a 0.7% decrease in real average hourly earnings. However, US consumer sentiment saw a slight increase in early June, partly due to lower gasoline prices, though overall sentiment remains subdued amid the conflict and inflation.
Europe's central bank responded by raising interest rates for the first time in nearly three years, with President Christine Lagarde warning that inflation is extending beyond energy. China's exports and imports saw significant jumps in May, contributing to a large trade surplus, while Japan's small firms face challenges from rising input costs. South Korea's economy showed faster growth, and Chile's inflation rose less than expected. Ghana's economy also experienced faster growth, supported by its industrial sector.