World Bank Cuts 2026 Global Growth to 2.5% as Iran War Lifts Inflation to 4%
Updated
Updated · The Guardian · Jun 11
World Bank Cuts 2026 Global Growth to 2.5% as Iran War Lifts Inflation to 4%
3 articles · Updated · The Guardian · Jun 11
Summary
2.5% global growth in 2026 would be the weakest since the pandemic, with the World Bank downgrading forecasts for two-thirds of countries and warning the 2020s could become a “lost decade” for many developing economies.
4% inflation next year, up from 3.3% in 2025, reflects war-driven disruption to oil and commodity flows through the Strait of Hormuz, while fertiliser prices could jump as much as 38% this year.
1.3% growth is the downside scenario if U.S.-Iran hostilities escalate again, a risk the bank tied to fragile ceasefire conditions and prolonged commodity disruptions that could deepen food insecurity and financial stress.
$100 billion in World Bank support is being made available over the next 15 months for countries hit hardest, as developing-country government debt has climbed to 70% of GDP from 40% in 2010.
1.3% growth is also forecast for Gulf economies in 2026, down from 4.5% last year, before a rebound tied to resumed oil flows and reconstruction; the bank still sees regional trade, clean energy and AI as longer-term growth drivers.
By trying to cripple Iran, is the United States unintentionally paving the way for its global rivals to gain dominance?
As the U.S. eyes Iran's oil fields, is military seizure of national resources becoming the new world order?
Global Growth Cut to 2.5% for 2026: World Bank Warns of Prolonged Fallout from Middle East War
Overview
The World Bank has revised its global growth forecast for 2026 downward, marking the lowest projection since the pandemic. This cut is mainly due to the escalating Middle East conflict, which began with U.S.-Israeli strikes on Iran in February 2026. These strikes caused major disruptions in the Strait of Hormuz, a key route for oil exports, leading to a historic energy shock. As a result, two-thirds of countries saw their growth forecasts lowered, with the biggest impacts on Middle Eastern nations like the UAE and Iraq, whose energy exports have been hit hardest by the ongoing hostilities.