The World Bank cut its 2026 global growth forecast to 2.5% on June 11, down from 2.9% in 2025, warning that the economic fallout from the Middle East conflict is pushing the world toward its weakest expansion since the onset of the COVID-19 pandemic.

Key Highlights

  • Global growth cut to 2.5%: The World Bank's Global Economic Prospects report, published June 11, revised the 2026 world growth forecast down from 2.9% in 2025, the lowest since the COVID pandemic.
  • Worst-case scenario of 1.3%: If energy supply disruptions worsen and trigger financial market stress, the Bank warns global growth could fall to just 1.3% in 2026, below the 2% threshold associated with a global recession.
  • Two-thirds of economies downgraded: Forecasts for two-thirds of the world's economies have been revised lower relative to January 2026 projections, with Gulf states taking the deepest cuts.
  • $60-$100BN pledged for developing nations: The World Bank is making up to $60 billion immediately available to developing countries hardest hit by the crisis, with the figure potentially scaling to $100 billion over 15 months if the conflict persists.

The World Bank released its June 2026 Global Economic Prospects report on Thursday, delivering its starkest assessment yet of the economic damage from the U.S.-Iran conflict. Global growth is now forecast at 2.5% for 2026, down from 2.9% in 2025 and the weakest rate since the COVID-19 pandemic began. Two-thirds of the world's economies have had their forecasts downgraded relative to January projections.

The Strait of Hormuz, through which roughly a fifth of global oil passes, has been disrupted since February 2026, driving Brent crude to an average projected at $94 per barrel for the full year. Higher energy prices have fed into headline inflation, projected to average 4% globally in 2026, prompting central banks including the ECB to begin tightening.

The Gulf economies directly affected by the conflict face the most severe downgrade. Growth in those economies is projected to collapse to near zero in 2026 from 3.9% in 2025, before rebounding to approximately 5% in 2027 as trade recovers and reconstruction spending begins. The UAE's 2026 GDP growth forecast was slashed to 2.4% from the January projection of 5%. Saudi Arabia's 2026 forecast was cut to 3.1% from 4.3%. Developing economies overall are expected to grow at 3.6%, a post-pandemic low, compared with 4.4% in 2025.

The Bank also warned that food security risks are intensifying in developing countries, with fertilizer prices up sharply due to the conflict and supply chain disruptions adding further pressure. If the conflict escalates and oil prices average $115 for the year, global growth would fall to 2.1%. In a severe scenario involving financial stress and capital outflows, the growth rate could reach as low as 1.3%, below the threshold for a simultaneous global recession.