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* According to the World Bank, global inflation is expected to stand at 4% amid high oil and fertilizer prices
* World Bank expects political uncertainty and high interest rates to persist for years
* The Middle East, North Africa, Afghanistan and Pakistan see the largest downward revisions to their growth forecasts
by Andrea Shalal
The World Bank on Thursday revised its global growth forecast for 2026 down to 2.5% due to the war in the Middle East, and said growth could slow to as little as 1.3% if disruptions in energy supplies prove more severe and are accompanied by significant market tensions financial.
Global growth reached 2.9% in 2025, the bank said in its semi-annual “Global Economic Outlook” report, an increase of 0.2 percentage points compared to its January estimates. Its forecast for 2026 is down 0.1 percentage points from January, the lowest level seen since the COVID-19 pandemic that began in late 2019.
The bank cut its forecasts for two-thirds of countries due to the war, with the biggest revisions affecting the United Arab Emirates, Iraq and other Middle Eastern countries whose energy exports have been hit hard by the conflict.
The World Bank’s bleak outlook comes as the war sparked by US and Israeli strikes against Iran on February 28 enters its fourth month. It led to a sharp rise in energy prices due to the closure of the Strait of Hormuz, reignited inflationary pressures globally and fueled expectations of a tightening of monetary policy in many countries. Fertilizer prices have also risen sharply, raising concerns about a major food supply crisis.
Oil prices closed almost $2 higher on Wednesday after US President Donald Trump said the United States would attack Iran “very hard” if no peace deal was reached, following one of the largest exchanges of fire since the April ceasefire.
The World Bank said its baseline forecast called for an average Brent price of $94 for the year, up 36% from 2025, and that the worst disruptions to energy supplies would ease by the end of July, with headline inflation at 4%.
She said growth could slow to 2.1 percent if energy disruptions last longer and oil prices average $115 a barrel this year, which could push inflation to 4.4 percent. The outlook would darken further, with growth slowing to just 1.3%, if the energy shock hits financial markets, leading to lower energy prices, greater volatility and lower confidence, she said.
“These risk scenarios show how quickly the outlook could deteriorate if energy and financial pressures reinforce each other,” said Ayhan Kose, deputy chief economist at the World Bank. If the energy shock caused a shock to financial markets, confidence could erode quickly, he added.
GROWTH LOWER THAN THAT OF THE LAST DECADE
Global growth is expected to improve to 2.8% in 2027 and 2028, but this figure remains 0.4 percentage points lower than average rates seen during the 2010s due to a host of factors, including slower population growth, slower growth in private investment, lower public investment, higher public debt and a slowdown in trade growth, said Indermit Gill, chief economist at the World Bank.
“The global economy today is much less resilient than it was in 2008, and even compared to 2018,” Gill told reporters, predicting that the coming years would be marked by high political uncertainty, inflationary pressures and interest rates. of high interest.
Weak growth in developing economies has hampered progress toward the income levels of advanced economies, with dozens of developing countries other than China and India facing a “lost decade” in which they have made no progress in reducing poverty. the gap in per capita income with advanced economies, the report said.
Developing economies have been hit harder by the war, with the bank now forecasting growth of 3.6% this year, its lowest level since the pandemic, compared to 4.4% in 2025, it said.
The bank maintained its 2.2% growth forecast for the US economy in 2026, but said it could slow to 2.1% in 2027 and 2% in 2028. The euro zone is expected to grow 0.8% in 2026, compared with 1.4% in 2025. Japan’s GDP is expected to grow by 0.7% in 2026, compared to 1.1% in 2025.
The World Bank forecasts GDP growth of 4.2% in China in 2026, a downward revision of 0.2 percentage points, after growth of 5% in 2025.
THE MOST AFFECTED MIDDLE EAST COUNTRIES
It lowered its forecast for GDP growth in the Middle East, North Africa, Afghanistan and Pakistan by 2.7 percentage points, to 1.6% in 2026, from 4% in 2025, but said growth in the region could rebound to 5% in 2027.
The UAE is expected to grow 2.4% in 2026, down sharply from January’s 5% forecast and 6.2% in 2025. The World Bank also lowered its GDP growth forecast for Turkey by 0.9 percentage points for 2026, bringing them down to 2.8%.
The World Bank said India remains the world’s fastest-growing major economy, with GDP expected to grow 6.6% in 2026, following growth of 7% in 2025. Growth rates in India are expected to remain quite high over the next two decades, Gill said.
