World Bank: Iran War Could Push Global Growth to Weakest Level Since Pandemic

The World Bank downgraded its outlook for global economic growth, warning that the Iran conflict could deepen economic pressures and push global expansion to its weakest pace since the Covid-19 pandemic.

In its latest Global Economic Prospects report, the World Bank said global growth is expected to slow to 2.5% in 2026, down from 2.9% in 2025, while global inflation is projected to remain elevated at around 4%.

World Bank President Ajay Banga said the institution is prepared to provide additional financial support as countries deal with the economic shock.

“ In response to the current shock, we are providing liquidity where needed and stand ready to offer additional financing, guarantees and private-sector solutions if pressures intensify,” Banga said.

The escalation of the Iran conflict, along with regional attacks and the disruption of shipping through the Strait of Hormuz, has triggered a sharp increase in energy prices.

The rise in fuel costs has fueled inflation concerns and raised the possibility of higher interest rates as central banks attempt to contain price pressures.

The World Bank announced that it will immediately make $60 billion available to developing countries most affected by the crisis, with support potentially increasing to $100 billion over the next 15 months.

The bank lowered growth forecasts for around two-thirds of global economies compared with projections released in January.

Officials warned that the impact will not be evenly distributed, with low-income developing countries facing significantly greater risks than advanced economies.

Indermit Gill, the World Bank’s chief economist, said Asia is currently the most affected region.

“West Asia is under enormous pressure from the conflict, while South Asia is being hit by higher prices for oil, gas, minerals and fertilizers,” Gill said.

The World Bank highlighted a series of shocks that have weakened the global economy in recent years, including the Covid pandemic, climate change, the Russia-Ukraine war, trade tensions and the latest Middle East conflict.

Gill warned that continued wars are damaging economies worldwide, especially vulnerable populations.

The World Bank’s baseline forecast assumes average Brent crude prices of $94 per barrel in 2026, with supply disruptions easing by July.

However, the institution warned that a prolonged energy crisis, financial market volatility and declining confidence could push global growth down to just 1.3%, while inflation could rise to 4.4%.

The severity of the impact depends on countries’ economic size, energy reserves and dependence on supply chains disrupted by the closure of the Strait of Hormuz.

The disruption has affected roughly one-third of global supply chains, according to the report.

The crisis is also threatening global fertilizer supplies, raising concerns about food security.

Gill warned that if the conflict continues, food prices will inevitably come under pressure, creating risks for North Africa and sub-Saharan Africa.

The World Bank called for coordinated international action, including stronger emergency food assistance systems and humanitarian corridors to prevent further deterioration.

Even before the latest conflict, global food insecurity had been increasing, with estimates showing that around 12% of the world’s population experienced severe food insecurity in 2025.

Countries already affected by conflict, including parts of Africa and the Middle East, remain among the most vulnerable to the growing economic and humanitarian fallout.