World Bank Warns of Economic Slowdown Amid Middle East Conflict

The World Bank cuts its global growth forecast for 2026 to 2.5% due to the Middle East war. If energy disruptions worsen, growth could further slow to 1.3%. High energy prices, inflation, and financial market stress are key concerns, impacting developing economies, including major declines in the Middle East.

The World Bank has reduced its global growth projection for 2026 to 2.5% due to ongoing conflict in the Middle East. This reduction stems largely from energy supply disruptions and heightened financial market stress, which could further dwindle growth to just 1.3% if the situation worsens.

This forecast is a revision from the previous estimate, as growth had reached 2.9% in 2025. The World Bank cited significant economic hits to Middle Eastern countries, including the UAE and Iraq, where energy exports have been notably affected by the conflict.

The situation has driven up energy and fertilizer prices, exacerbated inflation pressures globally, and sparked concerns of tightening monetary policies. Growth disparities are pronounced, with developing economies forecasted to see limited progress, while developed nations face lower growth compared to the previous decade.