Iran war to send global economic growth to weakest pace since pandemic, World Bank says
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The ongoing Iran war is projected to slow global economic growth to its weakest pace since the Covid-19 pandemic and renewed hostilities could cause it to slump further, according to a report released by the World Bank on Thursday.
Global economic growth is forecast at 2.5% this year, down from 2.9% in 2025, it said.
“A renewed escalation of hostilities or more prolonged disruptions to commodity flows could further raise commodity prices, intensify inflationary pressures and food insecurity, trigger financial stress, and lower growth.
“If energy supply disruptions prove more severe than assumed and are accompanied by substantial financial stress, global growth could fall to just 1.3% in 2026,” the World Bank added.
Oil, gas and fertilizer prices have spiked as shipping through the Strait of Hormuz remains effectively blocked.
Because of the Iran war, growth for all developing economies is forecast to be weaker than in 2025. Per capita income across developing countries except China and India is not expected to return to the pre-pandemic level until after 2028, it said.
