The World Bank Group has warned that the ongoing conflict in the Middle East is triggering a cascading economic shock through global supply chains, with fertilizer prices projected to surge by 31 percent in 2026, threatening food security for millions of people across developing economies.
According to the World Bank’s latest Global Economic Prospects report released on June 11, 2026, the closure of the Strait of Hormuz has severely disrupted energy markets, with Brent crude oil prices projected to average $94 a barrel in 2026—36 percent above 2025 levels. This energy shock is cascading into fertilizer markets, where urea prices have jumped 60 percent, eroding farmers’ incomes and threatening future crop yields.
Fertilizer affordability has fallen to its worst level since 2022, and the World Food Programme estimates that if the conflict proves prolonged, up to 45 million more people could be pushed into acute food insecurity this year. Higher fertilizer prices are of particular concern as many countries enter the planting season, with Sub-Saharan Africa expected to face the biggest pressures through inflation, including high food prices due to fertilizer supply shortages.
Global inflation is expected to rise to 4.0 percent in 2026, up substantially from 3.3 percent in 2025. In developing economies, inflation is projected to average 5.1 percent under baseline assumptions. The World Bank noted that the succession of shocks over the past decade has sharply reduced the fiscal space available to governments to respond to the current crisis.
In response to the conflict, the World Bank Group has mobilized up to $50–60 billion through existing instruments, including $25 billion of pre-arranged financing. This support is designed to bolster social safety nets for the most vulnerable populations, boost fiscal capacity, and provide working capital and liquidity support for firms and farms. If the conflict and its economic fallout persist, the institution can scale up its support to $80–100 billion over 15 months. To date, over 30 countries are actively working with the World Bank Group to enhance readiness and enable a rapid response.
The International Monetary Fund has also been closely engaged, with IMF Managing Director Kristalina Georgieva highlighting Africa’s economic challenges at the Africa Forward Summit. The IMF, alongside the World Bank, the International Energy Agency, and the World Trade Organization, established a high-level coordination group in April to maximize their collective response to the energy, trade, and economic impacts of the war. In a joint statement on May 29, the heads of these institutions warned that global oil inventories are being drawn down at a record pace and that continued rapid depletion ahead of peak summer oil demand presents increasing risks for fuel security and broader economic resilience.
The World Bank’s report also found that growth in developing economies is expected to drop to a post-pandemic low of 3.6 percent in 2026, down from 4.4 percent in 2025. Economies in the Gulf that are directly affected by the conflict are expected to take the biggest hit, with growth tumbling from 3.9 percent in 2025 to close to zero in 2026. Global growth overall is forecast to slow to 2.5 percent in 2026, the lowest rate since the COVID-19 pandemic.
World Bank Group President Ajay Banga stated that the institution is providing liquidity where it is needed now and is ready with additional financing, guarantees, and private-sector solutions if pressures deepen. “Our job is to help countries steady the ship, keep reforms moving, and emerge stronger on the other side,” he said.
The World Bank’s Deputy Chief Economist Ayhan Kose emphasized that while the conflict has taken a toll on global activity, the moment should be used to strengthen policy frameworks, invest in infrastructure, accelerate business-enabling reforms, and mobilize private capital to support job creation at scale.
Sources: imf.org/worldbank.org
