The World Bank Group has warned that the ongoing conflict in the Middle East is driving global economic growth down to its weakest level since the COVID-19 pandemic, according to its latest Global Economic Prospects report released in Washington on June 11, 2026.
Global growth is projected to slow to 2.5% in 2026, down from 2.9% in 2025, with forecasts for two-thirds of economies revised downward since January. While growth is expected to recover slightly to 2.8% in 2027, it will still remain below the average levels seen during the 2010s, highlighting a prolonged period of weak global expansion. The report also notes that developing economies are losing momentum, slowing progress toward closing the income gap with advanced economies.
The World Bank attributes the slowdown to rising energy prices, higher inflation, and increased borrowing costs, all of which have been intensified by geopolitical instability. Disruptions in energy markets, including impacts on global oil supply routes, have contributed to higher commodity prices and tighter financial conditions worldwide. Inflation is expected to rise to 4.0% in 2026, further pressuring households and businesses across both advanced and developing economies.
The report highlights that economies in the Gulf region are among the most affected, with growth expected to fall sharply from 3.9% in 2025 to near zero in 2026 before rebounding in subsequent years as trade stabilizes and reconstruction activity begins. Other developing regions, including South Asia and Sub-Saharan Africa, are also expected to experience slower-than-expected growth due to inflationary pressures and supply chain disruptions.
In response to rising global risks, the World Bank Group has announced it is preparing a large-scale financial support package for affected countries. It plans to make $50–60 billion available immediately through existing financial instruments, including pre-arranged financing, with potential support rising to $80–100 billion over the next 15 months if conditions worsen. This funding is intended to support social protection systems, provide liquidity to firms, and help stabilize economies facing severe shocks.
World Bank President Ajay Banga emphasized the need for countries to balance immediate crisis response with long-term growth strategies, while Deputy Chief Economist Ayhan Kose highlighted the importance of strengthening fiscal frameworks, improving infrastructure investment, and mobilizing private capital to support job creation.
The report also examines long-term structural challenges, noting that rising debt levels in developing economies have significantly reduced fiscal flexibility. Since 2010, government debt in these countries has climbed from under 40% to over 70% of GDP, increasing borrowing costs and limiting governments’ ability to respond to future crises effectively.
