World Bank Cuts Global Growth Forecast

The World Bank has significantly cut its global growth forecast for 2026 to 2.5%, the lowest since the COVID pandemic, primarily due to the ongoing war in the Middle East. This conflict, initiated by United States and Israel strikes on Iran, has led to the closure of the Strait of Hormuz, causing sharp increases in Brent Crude oil and fertilizer prices. These disruptions have reignited inflationary pressures worldwide and are expected to lead to tighter monetary policies. The World Bank has lowered growth forecasts for two-thirds of countries, with the Middle East, North Africa, Afghanistan, and Pakistan regions being the hardest hit. Countries like the United Arab Emirates, Iraq, and Turkey have seen substantial downgrades in their GDP growth projections. While India remains a fast-growing economy, China's growth forecast has also been revised downwards. The World Bank warns that growth could fall to 1.3% if energy supply disruptions worsen and trigger financial market stress. The institution is making up to $60 billion in credit available to developing countries to mitigate the crisis's impact, highlighting concerns about a 'lost decade' for many developing economies and potential food insecurity.