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Middle East war pushes global growth to slowest rate since Covid-19
World Bank Group says it is ready to provide up to $100 billion (Dh367 billion) financial support for countries affected by the Middle East war over 15 months
- PUBLISHED: Thu 11 Jun 2026, 7:38 PM UPDATED: Thu 11 Jun 2026, 7:42 PM
Global economy growth will grow at the slowest pace since Covid-19 due to the Middle East and high oil prices, said a new report released on Thursday.
According to the World Bank Group’s latest Global Economic Prospects report, global growth is forecast to slow to 2.5 per cent in 2026, down from 2.9 per cent in 2025.
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The report lowered growth forecasts for two-thirds of economies compared to its previous report released in January 2026.
Global growth is expected to improve to 2.8 per cent in 2027 but will remain 0.4 percentage point below the average during the 2010s. Weak growth in developing economies has stalled progress toward advanced-economy income levels. By 2028, developing economies other than China and India will have collectively experienced nearly a decade of no progress on narrowing their per capita income gap with advanced economies, the report finds.
“Developing countries have faced a series of challenges over the last decade,” said Ajay Banga, President of the World Bank Group.
Hormuz closure
According to the report, the closure of the Strait of Hormuz has severely disrupted energy markets, with Brent crude oil prices projected to average $94 a barrel in 2026, 36 per cent above 2025 levels, assuming the worst disruptions abate in July.
Fertilizer prices are forecast to increase significantly this year, with knock-on effects for food prices.
“Together, these pressures are pushing up global inflation, which is expected to rise to 4.0 per cent this year, up substantially from 3.3 pe cent in 2025,” said World Bank.
The report warned that if energy supply disruptions prove more severe than currently assumed and are accompanied by substantial financial stress, global growth could fall to just 1.3 per cent in 2026, and inflation would rise to 4.4 per cent.
Regional performance
The World Bank Group announced that it is immediately making up to $50-60 billion available through existing instruments, including $25 billion of pre-arranged financing, to support amid the Middle East war.
“To date, over 30 countries are actively working to enhance readiness and enable a rapid response to the crisis under this response plan. If the conflict and its economic fallout persist, the World Bank Group can scale up its support to $80-100 billion over 15 months,” it said.
South Asia is expected to see the strongest growth of any region in 2026, but even its growth will register a significant slowdown – from 7 per cent in 2025 to 6.3 per cent in 2026, the report finds.
Sub-Saharan Africa’s growth is also slowing, with the biggest pressures coming through inflation, including high food prices due to the fertilizer supply shortages and price hikes.
Among the other region, East Asia and Pacific region’s growth is projected to fall to 4.2 per cent in 2026 before firming to 4.4 per cent in 2027.
Europe and Central Asia’s growth is forecast to slow to 2.1 per cent in 2026 before edging up to 2.3 per cent next year.
Middle East, North Africa, Afghanistan, and Pakistan growth is expected to drop to 1.6 per cent in 2026 before recovering to 5.0 per cent in 2027.
