World Bank: Middle East war could lower global growth to 1.3% in 2026

World Bank: Middle East war could lower global growth to 1.3% in 2026

World Bank building

Indermit Gill, the World Bank's chief economist, warned that the escalation of war in the Middle East could slow global economic growth to 1.3% in 2026, compared to 2.9% in 2025, noting that the conflict could reignite inflation and push interest rates higher.

Gill said in an interview with Reuters that the World Bank presented three scenarios in its economic forecasts issued in June, but the worst-case scenario, which assumes the war continues for six months or more, is close to materializing, explaining that global inflation could rise to 4.5% in this case.

He added that the continuation of military strikes and damage to oil infrastructure in the region would exacerbate food insecurity, due to disruptions in shipments of fertilizers, helium, and sulfur used in agriculture.

He pointed out that poor countries, which have not fully recovered from the repercussions of the coronavirus pandemic, will be most vulnerable to the worsening food crisis, while heavily indebted countries will face higher borrowing costs, which will pressure spending on education, healthcare, and basic services.

War on Iran

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