The World Bank Group's latest Global Economic Prospects report, released in June 2026, warns that global growth is projected to slow to 2.5% this year, the lowest rate since the onset of the COVID-19 pandemic, driven by the ongoing conflict in the Middle East and its severe disruption of energy markets.
According to the report, global growth is forecast to decline from 2.9% in 2025 to 2.5% in 2026, with forecasts for two-thirds of all economies downgraded relative to January projections. A modest recovery to 2.8% is expected in 2027, though this remains 0.4 percentage points below the average during the 2010s. World Bank data indicates that global GDP growth in 2025 stood at 2.92%, essentially flat from the 2.90% recorded in 2024.
The closure of the Strait of Hormuz has severely disrupted global energy markets. Brent crude oil prices are projected to average $94 per barrel in 2026, a 36% increase above 2025 levels, assuming the worst disruptions abate by July. Fertilizer prices are also forecast to rise significantly, with cascading effects on global food prices. Global inflation is expected to climb to 4.0% in 2026, substantially higher than the 3.3% recorded in 2025.
Growth in developing economies is expected to drop to a post-pandemic low of 3.6% in 2026, down from 4.4% in 2025, before recovering to 4.2% in 2027. Economies in the Gulf region that are directly affected by the conflict face the steepest declines, with growth projected to tumble from 3.9% in 2025 to near zero in 2026, before rebounding to approximately 5% in 2027-28 as trade recovers and reconstruction spending begins.
South Asia remains the fastest-growing region globally, with growth forecast at 6.3% in 2026, though this marks a notable deceleration from 7.0% in 2025. Sub-Saharan Africa's growth is also slowing, with the primary pressures coming through elevated inflation, including high food prices driven by fertilizer supply shortages and price spikes.
The report highlights a concerning long-term trend: weak growth in developing economies has stalled progress toward narrowing the per capita income gap with advanced economies. By 2028, developing economies excluding China and India will have experienced nearly a decade of no convergence. Aggregate government debt in developing economies has also climbed sharply, from under 40% of GDP in 2010 to over 70%, constraining fiscal space for crisis response and long-term development investment.
In response to the crisis, the World Bank Group has made up to $50-60 billion available through existing instruments, including $25 billion in pre-arranged financing, to support social safety nets, boost fiscal capacity, and provide working capital for firms and farms. Over 30 countries are actively working with the Bank to enhance readiness, and support can scale to $80-100 billion over 15 months if the conflict and its economic fallout persist.
World Bank President Ajay Banga stated that developing countries face a common challenge: protecting people and preserving stability today without sacrificing growth and jobs tomorrow. The Bank is providing liquidity where needed now and stands ready with additional financing, guarantees, and private-sector solutions if economic pressures deepen.
The report's special-focus chapters examine fiscal vulnerabilities in commodity-exporting developing economies, noting that nearly 90% of low-income countries are commodity exporters that tend to have weaker fiscal positions due to volatile and less diversified revenues. World Bank Deputy Chief Economist Ayhan Kose emphasized that the current 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.
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Sources: worldbank.org
