The World Bank has reduced its global growth forecast to 2.5 percent for 2026, down from 2.9 percent, due to surging energy prices, inflation, and borrowing costs. The ongoing conflict in the Middle East is expected to slow down economic growth to its lowest level since the COVID-19 pandemic, with potential further declines if supply disruptions worsen, especially in the energy sector.
Why It Matters
The World Bank’s downgrade in the global growth forecast highlights the significant impact of the conflict in the Middle East on the world economy. Rising energy prices, inflation, and supply chain disruptions are key factors contributing to the slowdown. Developing countries are particularly vulnerable to these challenges, with the World Bank pledging up to $60bn to assist those affected by the economic fallout of the conflict.
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