US-Iran war could push global economic growth to post-pandemic low, World Bank warns
The ongoing conflict between the United States and Iran could slow global economic growth to its weakest pace since the COVID-19 pandemic, according to the World Bank's latest Global Economic Prospects report.
The Washington-based institution has downgraded its forecast for global growth in 2026 to 2.5%, down from the 2.9% projected in January, citing rising energy prices, accelerating inflation and increasing borrowing costs linked to instability in the Middle East, News.az reports.
According to the report, the conflict has placed significant pressure on global energy markets, particularly after disruptions involving the Strait of Hormuz, one of the world's most important oil and gas transit routes. The World Bank warned that continued uncertainty in the region could further weaken economic activity and increase inflationary pressures worldwide.
The institution estimates that Brent crude oil prices will average $94 per barrel this year, representing a 36% increase compared with last year's average. Rising energy costs are also expected to drive up fertilizer prices, creating additional pressure on global food markets.
The report forecasts global inflation to reach 4% in 2026, compared with 3.3% last year. However, the World Bank warned that if energy supply disruptions intensify, global growth could fall as low as 1.3%, while inflation could climb to 4.4%.
The economic impact is expected to be particularly severe for developing countries. The World Bank noted that growth forecasts have been downgraded for roughly two-thirds of economies worldwide since January.
Although global growth is projected to recover slightly to 2.8% in 2027, it would still remain below the average growth levels recorded during the 2010s.
The report also highlighted concerns that many developing nations, excluding China and India, have made little progress over the past decade in narrowing income gaps with wealthier countries.
World Bank Group President Ajay Banga said developing economies continue to face multiple challenges and stressed the need to balance immediate economic stability with long-term growth and job creation.
To help countries affected by the economic fallout from the Middle East conflict, the World Bank said it has allocated up to $60 billion in support funding. The institution added that assistance could be increased to $100 billion if the conflict continues and economic conditions deteriorate further.
By Faig Mahmudov
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