BSS
  11 Jun 2026, 20:34

World Bank lowers global growth forecast on Iran war impacts

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WASHINGTON, United States, June 11, 2026 (BSS/AFP) - The World Bank on 
Thursday lowered its global growth forecast to its lowest level since the 
pandemic, warning of the expanding economic impacts of the war in the Middle 
East on countries around the globe.

Worldwide growth is now forecast to drop to 2.5 percent in 2026, from 2.9 
percent a year earlier, with headline inflation averaging four percent, the 
multilateral lender said in its Global Economic Prospects report.

The US-Israel war on Iran has sent energy prices skyrocketing, causing 
steeper inflation with the potential for increased borrowing costs as central 
banks seek to tame the rampant price increases.

The World Bank said it was making up to $60 billion immediately available to 
developing countries which have been hardest hit by the crisis. It said that 
number could increase to $100 billion over 15 months.

"In response to the current shock, we are providing liquidity where it is 
needed now -- and we are ready with additional financing, guarantees, and 
private-sector solutions if pressures deepen," said Ajay Banga, the Bank's 
president.

Growth forecasts for two-thirds of the world's economies have been downgraded 
in the new report relative to January of this year.

And World Bank officials warned of the unequal nature of the shock, hitting 
low-income and developing countries harder than advanced economies.

"For now, Asia is the worst affected section of the global economy," said 
Indermit Gill, chief economist at the World Bank.

"West Asia is being battered by the conflict. South Asia is being affected by 
higher oil, gas, mineral, and fertilizer prices.

"Southeast Asia, countries like the Philippines, are suffering from higher 
fuel and mineral prices, and Northeast Asia is also experiencing these 
effects."

Some of the countries to see the highest downward revisions to GDP growth 
included the United Arab Emirates, Saudi Arabia, Turkey and Bangladesh.

Gill highlighted the series of shocks to hit the world economy in recent 
years -- including the pandemic, climate change, Russia's invasion of 
Ukraine, US President Donald Trump's tariff wars and now the Iran war -- as 
depleting countries' economic resilience.

"(The) first thing is to end the conflict in Ukraine, in the Gulf, and in 
Central Africa, and not start any new wars," he said.

"War anywhere is bad for poor people everywhere."

The World Bank's baseline scenario, upon which the forecast is based, assumes 
Brent crude prices will average $94 per barrel in 2026, with the worst of 
energy supply disruptions to abate by July.

If energy disruptions prove more severe, however, and supply issues lead to 
financial market volatility and a loss of confidence, global growth could 
fall as low as 1.3 percent, the Bank warned.

Worldwide headline inflation in that scenario would average 4.4 percent.

The intensity of the conflict's effects has varied based on countries' 
overall economic size, energy reserves and exposure to supply chains 
disrupted by the closure of the Strait of Hormuz.

The report labeled the 2020s a "lost decade" for developing countries to 
improve their economic prospects, as they battled one shock after another.

"Barring a miracle, the 2020s will prove to be what their ominous opening 
foreshadowed: a lost decade -- not just for a couple of outliers, but for 
dozens of developing economies," it said.

One of the key effects of the closure of the Strait of Hormuz has been the 
disruption of about a third of the world's fertilizer supplies, with knock-on 
effects on food security.

"If the conflict persists, the next thing that will be affected is food 
prices, and that'll spell trouble for North and Sub-Saharan Africa," said 
Gill.

The report called for coordinated global policy action to address the issue, 
including "to bolster emergency food aid mechanisms and establish 
humanitarian corridors to prevent further deterioration."

Even before the latest conflict, global food insecurity had been rising, with 
12 percent of the world population estimated to be in severe food insecurity 
in 2025 -- two percentage-points higher than in 2019.

Sub-Saharan countries -- including Burkina Faso, the Democratic Republic of 
Congo, Mali, Niger, Sudan and South Sudan -- are particularly exposed to the 
effects of the current crisis.

Elsewhere, conflict-affected states such as Syria, Lebanon and Yemen have 
been flagged as also being vulnerable to food insecurity.