The World Bank Group’s latest Global Economic Prospects indicates that the Middle East conflict is pushing global growth to the lowest rate since the COVID-19 era amid increased borrowing costs, higher energy prices and inflation.
Global growth is expected to slow to 2.5% in 2026 from 2.9% in 2025, with two-thirds of economies downgraded relative to January of 2026. ‘
The growth may also rise to 2.8% in 2027, but around 0.4 percentage points below the average during the 2010s.
The reports released on Thursday, says by 2028, developing economies, other than China and India, will have experienced nearly a decade of no progress on narrowing their per capita income gap with advanced economies.
It says the Strait of Hormuz closure has acutely disrupted energy markets, with Brent crude oil prices projected to average $94 a barrel in 2026, 36% above 2025 levels, if the worst interruptions ease in July.
Fertilizer prices are forecast to skyrocket this year, with knock-on effects for food prices. Cumulatively, the factors are upthrusting global inflation, which is predicted to rise to 4.0% in the coming months, up from 3.3% in 2025.
However, if energy supply cuts prove more severe than is witnessed and substantial financial stress occurs, global growth may fall to 1.3% in 2026, and inflation will rise to 4.4%, the Global Economic Prospects finds.
Ajay Banga, President of the World Bank Group, said although developing countries have faced a series of challenges in the last decade, the basic test remains protecting people and preserving
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