WASHINGTON (AP) – The economic fallout from the Iran war, including higher energy prices and increased uncertainty, will drag on global growth this year, the World Bank said Thursday.
Poverty agencies in 189 countries expect the global economy to grow by just 2.5% this year, the weakest performance since the COVID-19 pandemic upended global commerce six years ago.
The bank has cut its growth outlook for two-thirds of the world’s countries.
However, the United States, which started the war by attacking Iran in cooperation with Israel on February 28, was spared the downgrade. The World Bank expects the world’s largest economy to grow 2.2% this year, unchanged from its January forecast and slightly up from 2.1% in 2025.
As a major energy producer, the world’s largest economy is more resilient than countries that import oil and natural gas, and the U.S. economy has benefited from significant tax cuts and a surge in investment in artificial intelligence. but Ordinary Americans are still frustrated by Rising gasoline and other prices.
Other economies have been hit even harder. The World Bank lowers its 2026 growth forecast for developing and emerging market countries by 0.4 percentage points to 3.6%, the lowest post-pandemic level. In these countries, “conflict-induced energy supply disruptions and soaring energy prices have weakened confidence and weakened overall economic activity,” the central bank said.
China, the world’s second-largest economy, is expected to grow by 4.2% this year, down from 5% in 2025 and the central bank’s January forecast of 4.4% this year. India is once again the world’s fastest-growing major economy, expected to grow by 6.6% this year. However, it will drop significantly from 7.7% in 2025.
Together, the 21 European countries that share the euro currency are expected to grow by 0.8% this year, down from 1.4% in 2025.
Iran responded to attacks by the United States and Israel by closing the Strait of Hormuz, which passes through one-fifth of the world’s oil and gas routes. Energy prices have skyrocketed. The World Bank expects the price of benchmark Brent crude to average $94 a barrel this year, a 36% increase over 2025 and a 50% increase over what the bank expected in January.
The war has also disrupted the fertilizer trade, much of which is exported through the Persian Gulf. This could lead to food shortages as farmers skimp on fertilizer to avoid higher costs.
