US EditionMiddle East War to Cut Growth, Deliver Cascading Impact, World Bank Chief Says
Ajay Banga said a prolonged conflict could cut global growth by up to 1 percentage point and lift inflation by as much as 300 basis points.
- World Bank President Ajay Banga warned on Friday that the Middle East conflict could trigger cascading global economic impacts, even if the fragile ceasefire announced by United States President Donald Trump holds.
- Banga noted on Tuesday that global growth could fall by 0.3 to 0.4 percentage points in a baseline scenario, while inflation could increase by 200 to 300 basis points if the war continues.
- Oil prices have already surged 50pc due to the war, while an extreme scenario could see inflation hit 6.7%; emerging markets now project growth of 3.65%, dropping to 2.6% if conflict endures.
- Banga emphasized the need to diversify energy supplies as The World Bank discusses "crisis response windows" to support developing nations facing fiscal constraints from war-driven energy cost increases.
- "The question really is, does this current peace lead to a lasting peace and then a reopening of the Strait," Banga asked, as Israel and Iran continue strikes despite the two-week ceasefire.
15 Articles
15 Articles
Middle East war to cut global growth, spike inflation despite truce: World Bank
The World Bank's baseline estimate now projects growth in emerging markets and developing economies of 3.65 per cent in 2026, compared to 4 per cent in October, dropping as low as 2.6 per cent in an adverse scenario with a longer-lasting war.
World Bank: Middle East War to Slow Global Growth, Raise Inflation Risks Despite Ceasefire
The World Bank has issued a sobering warning regarding the global economy, significantly slashing growth projections for emerging markets and developing economies (EMDEs) for 2026. In a recent update, the baseline growth estimate for these nations was lowered to 3.65%, down from the 4% projected in October 2024. The primary driver of this downgrade is the escalating conflict in the Middle East, which has already surged oil prices by 50% and crip…
World Bank warns Middle East war to hit global growth
The Middle East war is poised to slow global growth and deepen inflation pressures even if a fragile ceasefire holds, the World Bank warned on Friday. World Bank President Ajay Banga said the conflict is already sending shockwaves through energy and trade systems. He described the economic outlook as increasingly uncertain. He estimated global growth could fall by 0.3 to 0.4 percentage point in a baseline scenario. A prolonged conflict could cut…
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