World Bank cuts global growth forecast to 2.5% citing Iran war fallout
6 verified5 unconfirmed
The World Bank has downgraded its global economic growth forecast to 2.5% for 2026, the weakest performance since the COVID-19 pandemic. The Washington-based development bank cited the economic fallout from the Iran war, including higher energy prices and increased uncertainty, as the primary cause. The downgrade applies to two-thirds of the world's countries, with developing and emerging market economies particularly affected. The bank's half-yearly Global Economic Prospects report also warns of rising inflation and disrupted trade in fertilizer, which could lead to food shortages. Despite the slowdown, the United States was spared a downgrade, with its economy still expected to grow at 2.2% for the year. The World Bank noted that a renewed escalation of hostilities could further depress growth, potentially dropping to as low as 1.3%.
What’s verified
Global economic growth is projected to be 2.5% in 2026, the weakest since the pandemic.
The World Bank downgraded growth forecasts for two-thirds of countries.
Higher energy prices and disruptions to trade through the Strait of Hormuz, triggered by the Iran war, are key factors.
Fertilizer trade has been disrupted, raising concerns about food shortages and higher costs for farmers.
Developing and emerging market economies face a post-pandemic low growth rate of 3.6%.
Even if disruptions abate, global inflation is expected to rise to 4% in 2026, up from 3.3% in 2025.
Not yet confirmed
One source reports that the World Bank is making up to $100 billion available over 15 months for affected countries, and that World Bank President Ajay Banga and Chief Economist Indermit Gill made public statements.
Another source reports that the U.S. growth forecast remains 2.2%, unchanged from January, and that the war began on Feb. 28 when the U.S. joined Israel to attack Iran.
Specific growth figures for China (4.2%), India (6.6%), and the eurozone (0.8%) appear in only one source.
The estimated average price for Brent crude oil is $94 a barrel in 2026 according to one source; the other source does not provide this figure.
One source mentions that aggregate government debt in developing countries has risen from 40% to 70% of GDP since 2010.
Key figures
World Bank (Washington-based development bank)
Ajay Banga, President of the World Bank
Indermit Gill, Chief Economist of the World Bank
Sources: The Guardian, abcnews.com
