World Bank: US-Israel vs Iran War Slashes 2026 Global Economic Growth

The World Bank has issued a stark warning about the future of the global economy. In its latest Global Economic Prospects report released on Thursday (11/6/2026), the Washington-based institution predicted that global economic growth will slow to its lowest point since the Covid-19 pandemic due to the escalating conflict in the Middle East. The World Bank slashed its global growth projection for 2026 to 2.5%, a significant drop from the 2.9% forecast in January. This decline is driven by surging energy prices, rising inflation, and high global borrowing costs. The report highlights the major risk posed by intensifying tensions between the United States and Iran. Iran’s closure of the Strait of Hormuz—a vital transit route for global oil and gas—in response to hostilities with the US and Israel has placed extraordinary pressure on the energy supply chain. The World Bank estimates that the average price of Brent crude oil will reach US$94 per barrel this year, a 36% jump compared to last year’s average. In addition to oil, fertiliser prices are also predicted to rise sharply, creating a domino effect that will increase global food prices. World Bank Group President Ajay Banga stated that developing countries are the most vulnerable to this economic fallout. The institution has lowered its growth forecasts for two-thirds of the world’s nations since the start of the year. “Developing countries have faced a series of challenges over the past decade,” Banga said. “The fundamental test remains the same: protecting people and maintaining stability today, without sacrificing future growth and jobs.” Excluding China and India, the report notes that developing countries have made almost no progress in narrowing the per capita income gap with wealthy nations over the last ten years. As a mitigation measure, the World Bank has committed to assisting developing countries affected by the Middle East conflict. The institution is preparing an initial aid package of US$60 billion, equivalent to approximately Rp1,000 trillion. The World Bank also affirmed that if the conflict continues and the economic impact widens, it is ready to increase its financial support to up to US$100 billion to help maintain stability in affected nations.