World Bank cuts global growth forecast to 2.5%; India seen growing 6.6% amid Iran war
The 189-country poverty alleviation agency expects the world economy to grow only 2.5% this year; This marks its weakest performance since the COVID-19 pandemic that roiled global trade six years ago.
The bank lowered its growth forecast for two-thirds of the world’s countries.
However, the USA, which started the war by joining Israel and attacking Iran on February 28, was saved from being downgraded. The World Bank expects the world’s largest economy to grow by 2.2% this year, unchanged from its January forecast and up one step from 2.1% in 2025.
As a major energy producer, the world’s largest economy is more resilient than oil and gas-importing countries, and the U.S. economy is benefiting from major tax cuts and increased investment in artificial intelligence. But ordinary Americans are still frustrated by high gas and other prices.
Other economies are being hit harder. The World Bank reduces its 2026 growth forecast for developing and emerging market countries by 0.4 points to 3.6%, the lowest level after the pandemic. The bank stated that in these countries, “the interruption in energy supply caused by conflicts and the sharp increase in energy prices undermines confidence and weakens overall economic activity.”
China, the world’s No. 2 economy, is expected to post economic growth of 4.2% this year, up from 5% in 2025 and the 4.4% the bank predicted for this year in January. India is expected to grow 6.6% this year, once again becoming the world’s fastest-growing major economy; however, this rate has fallen sharply from 7.7% in 2025. The 21 European countries that use the euro currency are collectively expected to achieve 0.8% growth this year, down from 1.4% in 2025.
Iran responded to the US and Israeli attacks by closing the Strait of Hormuz, which passes through one-fifth of the world’s oil and natural gas transits. Energy prices skyrocketed. The World Bank expects the price of benchmark Brent crude oil to average $94 per barrel this year; That’s up 36% from 2025 and 50% higher than the bank’s forecast in January.
The war also disrupted the fertilizer trade, much of which was exported via the Persian Gulf. This could lead to food shortages as farmers skimp on fertilizer to avoid higher costs.
