Global economic growth is projected to slow to 2.5 percent in 2026 from 2.9 percent in 2025 as the Middle East conflict triggers higher energy prices, the World Bank said this week in its Global Economic Prospects report. The semiannual flagship publication forecasts emerging market and developing economies to expand at a post-pandemic low of 3.6 percent this year, with per capita income growth at its weakest since the pandemic and risks to the outlook skewed to the downside.
The World Bank report released on June 11 noted that nearly two-thirds of economies have seen their growth forecasts downgraded since its January update. Growth is expected to decelerate across all emerging market and developing economy regions this year due to the regional conflict’s effects on commodity markets and trade. The institution highlighted that energy import-dependent countries and those directly impacted by hostilities face particularly weaker prospects.
According to the report, global inflation is rising to 4.0 percent driven by energy price surges with Brent crude projected to average 94 dollars a barrel. That oil price represents a 36 percent increase from 2025 levels and contributes to broader cost pressures worldwide. The World Bank assessment found that these developments compound challenges for low-income countries where growth is now forecast at 5.4 percent for 2026, a 0.3 percentage point reduction from earlier projections.
The flagship report stated that per capita income in emerging market and developing economies excluding China and India is not expected to return to pre-pandemic levels relative to advanced economies until after 2028. This trajectory implies nearly a decade without meaningful income convergence for most such economies. World Bank data show that activity is projected to firm in 2027 and 2028 as energy supplies recover, monetary policy eases and trade strengthens.
Downside risks remain prominent according to the World Bank analysis. A renewed escalation of hostilities or prolonged commodity disruptions could push global growth as low as 1.3 percent in 2026 while intensifying inflation and food insecurity. The report identified additional threats from persistent trade policy uncertainty, geopolitical strains and weather-related shocks even as broader adoption of artificial intelligence offers potential upside for productivity and investment.
The World Bank called for coordinated policy responses to address the challenges outlined in the June 2026 outlook. Globally this includes measures to safeguard energy and food security, bolster the trading system and advance the energy transition. At the domestic level the institution recommended balancing inflation control with growth support while strengthening fiscal sustainability through revenue mobilization and improved debt management.
Commodity exporters in particular require strong institutional frameworks and revenue diversification to build resilience the report found. Rising debt has driven up borrowing costs for many emerging market and developing economies especially the most indebted ones. The assessment builds on earlier World Bank warnings about subdued post-pandemic growth trends that have left many economies struggling to regain lost ground.
