World Bank Lowers Global Growth Forecast to 2.5% as Middle East War Threatens Economy

The global economy is expected to slow in 2026 as the ongoing conflict in the Middle East continues to disrupt energy markets and increase economic uncertainty. The World Bank has cut its global growth forecast to 2.5%, warning that growth could fall as low as 1.3% if energy supply disruptions worsen and trigger financial market stress.

Global Economic Growth Faces New Challenges

After expanding by 2.9% in 2025, the world economy is projected to lose momentum next year. The latest outlook shows weaker growth across nearly two thirds of economies, with countries in the Middle East facing some of the sharpest downgrades due to reduced energy exports and conflict-related disruptions.

Oil Prices and Inflation Remain Key Risks

The report assumes Brent crude oil will average $94 per barrel in 2026, around 36% higher than last year. Global inflation is forecast at 4%, driven by elevated oil and fertilizer prices. If oil prices rise to an average of $115 per barrel and disruptions last longer, global growth could slow to 2.1%.

Developing Economies Under Pressure

Growth in developing economies is expected to fall to 3.6% in 2026 from 4.4% in 2025. The Middle East, North Africa, Afghanistan and Pakistan region is forecast to grow just 1.6%, compared with 4% last year.

India Leads Major Economies

India is expected to remain the fastest-growing major economy with growth of 6.6% in 2026. China is projected to expand by 4.2%, while growth in the United States, Europe and Japan is expected to remain modest as high interest rates and inflation continue to weigh on economic activity.