The World Bank has revised its global economic outlook for 2026, lowering its growth forecast to 2.5% as ongoing geopolitical tensions in the Middle East continue to weigh on the global economy.
According to the Bank’s latest Global Economic Prospects report, stronger-than-expected growth of 2.9% was recorded in 2025. However, the outlook for 2026 has weakened due to rising energy prices, renewed inflationary pressures and increased uncertainty across international markets.
The report notes that the conflict in the Middle East has significantly disrupted energy exports from several countries in the region. The closure of the Strait of Hormuz has contributed to higher oil and fertilizer prices, increasing concerns over global inflation and food security.
Under its baseline scenario, the World Bank expects Brent crude oil to average around $94 per barrel in 2026, approximately 36% higher than last year. Global inflation is projected to remain close to 4% if energy market conditions gradually stabilize.
However, the Bank warned that prolonged supply disruptions could have much broader consequences. If oil prices average $115 per barrel, global growth could slow to 2.1% while inflation may rise to 4.4%. In a more severe scenario, where energy market disruptions trigger financial market instability, global economic growth could decline sharply to just 1.3%.
Developing economies are expected to experience the greatest impact. Growth in these countries is forecast to fall to 3.6% in 2026, compared with 4.4% in 2025. The report also suggests that many developing nations, excluding China and India, risk experiencing a prolonged period of weak economic convergence with advanced economies.
Regional forecasts were revised downward as well. Economic growth in the Middle East, North Africa, Afghanistan and Pakistan is now projected at 1.6% for 2026. The United Arab Emirates is expected to grow by 2.4%, while Türkiye’s growth forecast has been lowered to 2.8%.
Among major economies, the World Bank forecasts 4.2% GDP growth for China, 2.2% for the United States, 0.8% for the Euro Area, and 0.7% for Japan in 2026. India is expected to remain the world’s fastest-growing major economy with projected growth of 6.6%.
The report concludes that global economic resilience has weakened compared with previous decades, highlighting rising public debt, slower investment, demographic changes and continued geopolitical uncertainty as key challenges facing the world economy.
Source: Reuters, based on the World Bank’s Global Economic Prospects report.
Original article: https://www.reuters.com/world/china/world-bank-cuts-global-growth-outlook-25-warns-drop-13-if-war-fallout-spreads-2026-06-11/
