The World Bank expects global growth to slow to 2.5% in 2026, its lowest rate since the onset of the COVID-19 pandemic, and down from 2.9% a year earlier, hurt by the conflict in the Middle East, according to its latest Global Economic Prospects report.
Higher energy prices, steeper inflation, and increased borrowing costs will all likely contribute to slower growth, according to the report.
The closure of the Strait of Hormuz has severely disrupted energy markets and driven up fertilizer prices, leading to higher food prices and driving up global inflation, the World Bank said.
Global growth is expected to rise to 2.8% in 2027, but will remain 0.4 percentage points below the average during the 2010s, the report stated.
In 2026, the World Bank is projecting growth of 4.2% in East Asia and the Pacific, 2.1% in Europe and Central Asia, 2.2% in Latin America and the Caribbean, 1.6% in the Middle East, North Africa, Afghanistan, and Pakistan, 6.3% in South Asia, and 4% in Sub-Saharan Africa.
The World Bank said it is ready to provide up to $100 billion for affected countries over 15 months if the conflict and its economic fallout persist.