Forecast Revision

World Bank reduced its 2026 global GDP growth projection to 2.5%, a 0.1 percentage‑point cut from the January estimate and the lowest rate since the COVID‑19 pandemic began in late 2019. The previous forecast for 2025 was 2.9%, up 0.2 points from the January estimate.

Underlying Assumptions

  • The baseline scenario assumes an average Brent crude oil price of $94 per barrel for 2026, representing a 36 % increase over the 2025 price.
  • Global headline inflation is projected at 4 % under this baseline.
  • If energy supply disruptions persist, the model assumes Brent oil averaging $115 per barrel, pushing global growth to 2.1% and inflation to 4.4 %.
  • A combined energy and financial market shock could lower growth further to 1.3 %.

Regional Outlook

  • United States: Growth forecast unchanged at 2.2% for 2026, with a gradual decline to 2.1% in 2027 and 2.0% in 2028.
  • Euro area: Expected to grow 0.8% in 2026, down from 1.4% in 2025.
  • Japan: GDP growth projected at 0.7% in 2026, versus 1.1% in 2025.
  • China: Forecast revised to 4.2% for 2026, a 0.2‑point reduction after 5% growth in 2025.
  • Middle East, North Africa, Afghanistan, Pakistan: Growth cut by 2.7 points to 1.6% in 2026, from 4% in 2025, with a rebound to 5% anticipated in 2027.
  • United Arab Emirates: Growth lowered sharply to 2.4% in 2026, from the January outlook of 5% and 6.2% in 2025.
  • Turkey: 2026 GDP growth trimmed by 0.9 points to 2.8%.
  • India: Remains the fastest‑growing large economy, projected at 6.6% in 2026 after 7% growth in 2025, with expectations of relatively high rates for the next two decades.

Drivers and Risks

  • The downgrade reflects the impact of the ongoing Middle East war, which began with U.S. and Israeli strikes on Iran on 28 February and is now in its fourth month.
  • Conflict‑driven closures of the Strait of Hormuz have lifted oil prices, creating renewed inflationary pressures and prompting expectations of tighter monetary policy worldwide.
  • Fertilizer price spikes raise concerns about a potential food‑supply crisis.
  • World Bank deputy chief economist Ayhan Kose warned that energy and financial market pressures could quickly erode confidence if they reinforce each other.
  • Chief economist Indermit Gill attributed the longer‑term slowdown to slower population growth, weaker private and public investment, rising public debt, and reduced trade growth.

Outlook Beyond 2026

  • Global growth is projected to improve to 2.8% in both 2027 and 2028, still 0.4 percentage points below the average rates of the 2010s.