NextFin News - The World Bank said on June 11 that two-thirds of the world’s economies have seen their growth prospects deteriorate as the Middle East war disrupts commodity flows and raises the cost of imports. In a report published Thursday, the Washington-based lender cut its forecast for world growth in 2026 to 2.5% from 2.6% in January. Bloomberg said that would be the weakest annual expansion since the Covid-19 recession in 2020.
The downgrade is small in numerical terms, but broad in scope. The World Bank said the hit is not confined to a single trade route or one commodity market. Higher freight and insurance costs, more expensive imported energy, and delayed investment decisions are all feeding into the outlook as firms and governments reprice risk.
The bank’s language matters because it usually writes in cautious, data-driven terms and builds forecasts from broad country coverage. This latest revision reads as a baseline reassessment rather than a tail-risk warning. Its point is that the war’s economic spillovers are now large enough to affect a wide majority of economies, even if the damage varies sharply by region, trade exposure and energy dependence.
Commodity prices have again become a direct channel for weaker growth, especially in import-dependent economies that cannot easily absorb higher oil, refined-product or food costs. For emerging markets with limited fiscal space, pricier imports and slower external demand can squeeze current accounts and force central banks to choose between supporting growth and defending currencies. Advanced economies may face a smaller direct hit, but weaker trade volumes and renewed inflation pressure still complicate policy just as many central banks had hoped to normalize.
The warning comes after a period in which markets were already doubtful about how durable the global expansion would be. Before this report, investors were already parsing sluggish industrial activity, uneven Chinese demand and sticky services inflation. The Middle East conflict adds another layer of uncertainty to a cycle that was already fragile. The World Bank is not calling a recession inevitable. It is saying the margin for error has narrowed, and forecasts built around stable trade and energy prices are harder to sustain.
There is a clear difference between a forecast cut and a crisis call. The World Bank’s 2.5% projection still points to global expansion, but at a pace that leaves little cushion if conditions worsen. That matters for policymakers. A world growing at 2.5% is still vulnerable to further supply shocks, shipping disruptions or an escalation that spreads beyond energy markets.
How long the shock lasts remains the central question. If the war stays contained and commodity markets stabilize, some of the forecast damage could unwind through lower import prices and improved confidence. If the conflict broadens or supply routes remain disrupted for longer, the effect could be more durable, particularly in economies that rely heavily on foreign fuel or food. The World Bank’s estimate is tied to current conditions, not a fixed endpoint.
For policymakers, the report sharpens an awkward trade-off. Governments facing slower growth may want fiscal support, but those importing more expensive goods may also need to contain deficits and protect currencies. Central banks cannot ignore the inflation pass-through from higher commodity costs even if the real economy weakens. The World Bank’s latest forecast leaves a concrete benchmark: 2.5% growth in 2026, down from 2.6% in January, with deteriorating prospects across two-thirds of economies.
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