WASHINGTON — Global economic expansion will slow significantly this year as the ongoing conflict with Iran drives up energy costs and creates widespread market uncertainty, according to a new World Bank assessment released Thursday.
The international development organization now projects worldwide economic growth of only 2.5% for this year, marking the poorest performance since the COVID-19 pandemic disrupted international trade six years ago.
The financial institution revised downward its growth projections for two-thirds of nations across the globe.
However, the United States avoided a forecast reduction. The World Bank maintains its prediction that America’s economy will expand by 2.2% this year, matching its January projection and slightly improving from 2.1% growth in 2025.
The U.S. economy demonstrates greater stability than oil and natural gas importing nations due to its status as a significant energy producer, while also benefiting from substantial tax reductions and surging artificial intelligence investments. Nevertheless, American consumers continue to face frustration over elevated gasoline and commodity costs.
Developing nations face more severe economic headwinds. The World Bank reduced its 2026 growth estimate for emerging market economies by 0.4 percentage points to 3.6%, the lowest projection since the pandemic. According to the bank, in these regions, “the disruption in energy supplies and sharp increase in energy prices caused by the conflict have dampened confidence and weakened broader economic activity.”
China, the second-largest global economy, is projected to achieve 4.2% growth this year, declining from 5% in 2025 and below the 4.4% the institution had previously predicted for this year in January. India is anticipated to maintain its position as the fastest-expanding major economy with 6.6% growth, though this represents a significant drop from 7.7% in 2025.
The 21 European nations using the euro currency are collectively forecast to achieve modest 0.8% expansion this year, down from 1.4% in 2025.
Iran’s response to attacks by the U.S. and Israel included shutting down the Strait of Hormuz, a critical passage for one-fifth of global oil and natural gas shipments. Energy costs have surged as a result. The World Bank anticipates Brent crude oil will average $94 per barrel this year, representing a 36% increase from 2025 and 50% above the institution’s January projection.
The conflict has also interrupted fertilizer trade flows, with significant exports moving through the Persian Gulf region. This disruption could trigger food supply shortages as agricultural producers reduce fertilizer use to avoid increased expenses.
