World Bank Cuts Global Growth Forecast Amid Middle East Conflict

The World Bank Group lowered its 2026 global economic growth forecast to 2.5%, the lowest level since the COVID-19 pandemic. This revision follows a four-month conflict initiated by U.S. and Israeli strikes on Iran on February 28, which prompted Iran to close the Strait of Hormuz. The closure disrupted one-third of global fertilizer supplies and is expected to push Brent crude oil to an average of $94 per barrel in 2026, a 36% increase over 2025 levels.

Global inflation is projected to rise to 4.0% as energy and commodity prices spike. While the United States maintained a 2.2% forecast due to AI investments and domestic energy production, growth forecasts for two-thirds of the world's countries were reduced. Developing nations face a projected growth low of 3.6%, with Gulf economies potentially dropping to near zero. The bank warns that further energy disruptions and financial stress could plummet global growth to 1.3%.

In response, the bank is making $50 billion to $60 billion in liquidity immediately available, with the potential to scale to $100 billion over 15 months to support over 30 countries. Despite the volatility, the bank upgraded India's 2026 growth forecast to 6.6%, citing strong domestic demand and favorable demographics. Market instability persists as President Donald Trump signaled potential deals with Iran while threatening to attack the country very hard if a peace deal is not finalized.