World Bank cuts global growth forecast to 2.5% in 2026

The World Bank has sharply downgraded its outlook for the global economy, warning that conflict in the Middle East is slowing growth to its weakest pace since the COVID-19 pandemic and threatening to create a "lost decade" for dozens of developing nations. In its latest Global Economic Prospects report released this week, the institution forecasts global growth will slow to 2.5% in 2026, down from 2.9% in 2025, with about two-thirds of the world's economies seeing their prospects deteriorate.

The report attributes the slowdown primarily to disruptions from the conflict, which has led to the closure of the Strait of Hormuz, a vital passage for global energy and fertilizer shipments. This has triggered a sharp increase in commodity prices, reigniting inflationary pressures worldwide. The World Bank projects the Brent crude oil benchmark will average $94 per barrel in 2026, a 36% increase over 2025 levels, while fertilizer prices are also forecast to rise significantly. Global inflation is now expected to rise to 4.0% this year, up from 3.3% in 2025.

Officials warned the economic shock is not being felt evenly, with low-income and developing countries facing significantly greater...