The World Bank Group has released its Global Economic Prospects report for June 2026, projecting that global economic growth will slow to 2.5 percent in 2026, the lowest rate since the onset of the COVID-19 pandemic. The figure marks a decline from 2.9 percent in 2025, with the World Bank citing the ongoing conflict in the Middle East, higher energy prices, steeper inflation, and increased borrowing costs as primary factors.
According to the World Bank, forecasts for approximately two-thirds of economies have been downgraded relative to its January 2026 projections. The report warns that growth in developing economies is expected to drop to a post-pandemic low of 3.6 percent this year, down from 4.4 percent in 2025, before recovering to 4.2 percent in 2027. The World Bank said weak growth in developing economies has stalled progress toward closing income gaps with advanced economies.
Global inflation is expected to rise to 4.0 percent in 2026, up substantially from 3.3 percent in 2025, the report said. Fertiliser prices are forecast to increase significantly, with knock-on effects for food prices. The World Bank said the conflict in the Middle East is driving much of the price pressure through energy supply disruptions and broader supply-chain effects.
The report also examines a downside scenario in which energy supply disruptions prove more severe than currently assumed and are accompanied by substantial financial stress. Under that scenario, global growth could fall to just 1.3 percent in 2026, with inflation rising to 4.4 percent, the World Bank said.
The World Bank said it is immediately making up to US0-60 billion available through existing instruments to support developing countries confronting the effects of the conflict.
A special-focus chapter of the report examines fiscal challenges facing developing economies. About two-thirds of developing economies — and nearly 90 percent of low-income countries — are commodity exporters, according to the World Bank. These economies tend to have weaker fiscal positions than other developing economies, as they face more volatile and less diversified revenues. The report found that five years after a positive commodity price shock, much of the revenue windfall is spent rather than saved to strengthen fiscal positions. To manage commodity price volatility, the World Bank recommended frameworks such as well-designed fiscal rules and sovereign wealth funds with clear stabilisation mandates, alongside improved domestic revenue mobilisation and greater economic diversification.
The June 2026 Global Economic Prospects report is the latest semiannual assessment from the World Bank, which together with the International Monetary Fund provides the main multilateral forecasts for the global economy. The next World Bank update is expected in January 2027.
