NEW YORK, United States (US): The World Bank on Thursday lowered its global growth forecast to 2.5 per cent for 2026, down from 2.9 per cent in 2025, marking the lowest rate since late 2019, reported Xinhua.
The bank’s semi-annual Global Economic Prospects report cited higher energy prices, steeper inflation and increased borrowing costs amid the West Asia conflict for the growth cut.
Downside risks are significant, the report warned. Global growth could further slow to 2.1 per cent if the energy disruptions lasted longer and oil prices averaged USD115 per barrel this year, driving inflation to 4.4 per cent; or worsen to 1.3 per cent if the energy shock affected financial markets.
The report lowered growth forecast for two-thirds of countries compared to its January report this year, with countries in the Gulf taking the biggest cuts from 3.9 per cent in 2025 to close to zero in 2026.
South Asia is expected to have the strongest growth of any region at 6.3 per cent in 2026, still a slowdown from 7 per cent in 2025.
The report maintained its 2.2 per cent growth forecast for the US economy in 2026, although it noted that this figure could drop to 2.1 per cent in 2027 and 2 per cent in 2028.
Economy in the euro area is expected to grow 0.8 per cent in 2026, down from 1.4 per cent in 2025. Japan’s gross domestic product is forecast to grow 0.7 per cent in 2026, down from 1.1 per cent in 2025.
The report expects global growth to improve to 2.8 per cent in 2027, but this will remain 0.4 percentage points below the average in the 2010s.
While risks remain skewed to the downside amid escalating hostilities, further commodity market disruptions and additional geopolitical strains, the bank holds that policy action is critical.
Globally, the World Bank urges concerned countries to safeguard energy and food security and advance the energy transition; domestically, it urges all countries to control inflation, strengthen fiscal sustainability and support job creation. – BERNAMA-XINHUA
