World Bank predicts poor growth for Iran in 2026

The World Bank predicts that ongoing military escalation between the United States and Iran could lead to a significant slowdown in global economic growth, dropping to 1.3% in 2026 compared to 2.9% in 2025 if the conflict lasts at least six months. The breakdown of the ceasefire and increased tensions in the Strait of Hormuz and the Red Sea are expected to push global inflation up to around 4.5%, which could result in higher oil prices and disruptions in energy markets. The report also warns that damage to energy infrastructure in the Middle East could hamper supplies of essential goods and worsen the food security crisis, especially in developing countries that are already facing rising borrowing costs and negative impacts on health and education sectors. Approximately 40% of low- and middle-income countries are experiencing debt pressures, with average debt rising to 74% of GDP in emerging economies, and some governments seeking additional financial support. Nevertheless, the outlook suggests that major economies are capable of absorbing these impacts, while emphasizing that technology and artificial intelligence may provide long-term opportunities for emerging markets to achieve future productivity gains.

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