The World Bank reported in the June edition of its Global Economic Prospects Report that conflict in the Middle East is expected to push global growth to its lowest level since the start of the Covid-19 pandemic due to rising energy prices, rising inflation and rising borrowing costs.
The report said global growth, which was 2.9 percent in 2025, is expected to decline to 2.5 percent in 2026.
The bank, which cut its growth forecasts for two-thirds of economies from January, forecast global economic growth of 2.6 percent this month.
The report highlighted that global growth is expected to rise to 2.8 percent in 2027, but this rate will remain 0.4 points below the 2010s average.
The report said weak growth in developing countries has stalled their progress toward reaching the income levels of developed economies, and that developing countries other than China and India as a whole will face a nearly decade-long period of stagnation until 2028 in closing the per capita income gap between them and developed economies.
Average expectation: $94 per barrel of Brent oil
The report noted that the closure of the Strait of Hormuz had seriously disrupted energy markets. Assuming disruptions ease in July, the barrel price of Brent oil is expected to be 36 percent above 2025 levels and average $94 this year.
It is estimated that fertilizer prices will rise significantly this year, which will have chain effects on food prices. The report said: “All of these pressures are driving up global inflation, and inflation is expected to rise from 3.3 percent in 2025 to 4 percent this year.” evaluation was carried out.
The report stressed that downside risks are very serious, noting that global growth could fall to 1.3 percent and inflation could rise to 4.4 percent in 2026 if energy disruptions are more severe than currently estimated and accompanied by greater financial constraints.
“The World Bank is committed to supporting countries”
The report said growth in developing countries is expected to fall to 3.6 percent this year from 4.4 percent in 2025, the lowest level since the epidemic, and is expected to rise to 4.2 percent in 2027.
The report said growth in Gulf economies directly affected by the conflict is expected to take the biggest hit, falling from 3.9 percent in 2025 to 0 percent in 2026.
It stated that growth in these economies is expected to return to around 5 percent in 2027-2028 as trade recovers and restructuring spending begins.
The report emphasized that the World Bank is committed to supporting all developing countries struggling with crises, noting that:
“In response to the conflict in the Middle East, the Agency is immediately making available up to $50 billion to $60 billion through existing instruments, including $25 billion in pre-arranged financing. This financing can support social safety nets for the most vulnerable, increase financial capacity, and support businesses and agribusinesses with working capital and liquidity. To date, more than 30 countries are actively working with the World Bank to improve crisis preparedness and rapid response as part of this response plan. The World Bank continues: “The bank can increase its support to $80 billion to $100 billion for 15 months.”
Growth in the Gulf states has been revised downwards
In the report, which also includes countries' growth forecasts, the U.S. economy's growth expectation for this year was left at 2.2 percent, while it was revised to 2.1 percent from 1.9 percent in 2027.
Growth expectations for this year were lowered from 0.8 percent to 0.7 percent for Japan, from 0.9 percent to 0.8 percent for the euro zone and from 4.4 percent to 4.2 percent for China.
Growth expectations for this year for the conflict-affected Middle East, North Africa, Afghanistan and Pakistan region were revised to 1.6 percent, a decline of 2.7 points. The growth forecast for Saudi Arabia was lowered from 4.3 percent to 3.1 percent and for the United Arab Emirates from 5 percent to 2.4 percent.
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