Citing fallout from Iran war, World Bank cuts forecast for global economic growth

WASHINGTON (AP) — The economic fallout from the Iran war — higher energy prices and increased uncertainty — will drag down global growth this year, the World Bank said Thursday.

The 189-country anti-poverty agency expects the world economy to grow just 2.5% this year, its weakest performance since the COVID-19 pandemic upended global commerce six years ago.

The bank downgraded its forecast for growth in two-thirds of the world’s countries.

But the United States, which started the war by joining Israel to attack Iran on Feb. 28, is being spared a downgrade. The World Bank still expects the world’s biggest economy to grow 2.2% this year, unchanged from a January forecast and up a tick from 2.1% in 2025.

As a major energy producer, the world’s biggest economy is more resilient than countries that import their oil and natural gas, and the U.S. economy is benefiting from big tax cuts and booming investment in artificial intelligence. But ordinary Americans are still frustrated by higher gasoline and other prices.

Other economies are getting hit harder. The World Bank is slashing its 2026 growth forecast for developing and emerging market countries by 0.4 percentage points to a post-pandemic low of 3.6%. In those countries, the bank said, “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 world’s No. 2 economy, is expected to register economic growth of 4.2% this year, down from 5% in 2025 and from the 4.4% the bank had forecast for this year back in January. India is once again expected to be the world’s fastest-growing major economy, expanding 6.6% this year; but that’s down sharply from 7.7% in 2025.

The 21 European countries that share the euro currency are collectively expected to eke out 0.8% growth this year, down from 1.4% in 2025.

Iran responded to U.S. and Israeli attacks by closing down the Strait of Hormuz, through a fifth of the world’s oil and natural gas passes. Energy prices rocketed. The World Bank expects the price of the benchmark Brent crude oil to average $94 a barrel this year, up 36% from 2025 and 50% more than the bank had forecast in January.

The war has also disrupted trade in fertilizer, much of which is exported through the Persian Gulf. That could lead to food shortages as farmers skimp on fertilizer to avoid higher costs.

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