Washington: The World Bank announced its readiness to mobilize up to $100 billion in financial support over the next 15 months to aid developing economies in mitigating the effects of escalating tensions in the Middle East. The plan is a response to the lender's caution that the ongoing conflict may lead to the weakest global growth since the COVID-19 pandemic, as rising energy prices, persistent inflation, and tighter financial conditions continue to impact economic activity.
According to Ghana Web, the World Bank's latest Global Economic Prospects report projects a slowing of global growth to 2.5 percent in 2026, down from 2.9 percent in 2025, with about two-thirds of economies experiencing downward revisions since the bank's January forecast. Growth is expected to rise slightly to 2.8 percent in 2027, but it will still fall short of the average recorded during the 2010s.
The World Bank has already made $50 billion to $60 billion available through existing financing mechanisms, including $25 billion in pre-arranged funding. These resources aim to support social safety nets, bolster government finances, and provide liquidity for businesses and farms affected by the crisis. The bank noted that over 30 countries are actively collaborating with the World Bank Group to enhance readiness and enable a rapid response under this plan. If necessary, the World Bank Group can increase its support to $80-100 billion over the 15-month period.
The report highlights that the closure of the Strait of Hormuz has severely disrupted energy markets, with Brent crude oil prices expected to average $94 a barrel in 2026, reflecting a 36 percent increase from 2025, assuming the worst supply disruptions ease by July. Additionally, higher fertilizer prices are likely to contribute to food inflation, with global inflation projected to rise to four percent this year, up from 3.3 percent in 2025.
World Bank Group President Ajay Banga emphasized the challenges faced by developing countries over the last decade and stressed the need to protect people and maintain stability, while also focusing on growth and job creation. Banga stated that the World Bank is ready to provide liquidity immediately and additional financing if pressures escalate.
The report warns of significant downside risks, indicating that further energy supply disruptions and financial market stress could reduce global growth to 1.3 percent in 2026, with inflation potentially climbing to 4.4 percent. Developing economies are forecasted to experience growth slowing to 3.6 percent this year from 4.4 percent in 2025, before a recovery to 4.2 percent in 2027. Gulf economies, directly impacted by the conflict, are projected to see the sharpest slowdown, with growth dropping from 3.9 percent in 2025 to nearly zero in 2026, before rebounding in 2027 and 2028 as trade resumes and reconstruction efforts progress.
Sub-Saharan Africa is also expected to be affected, particularly through higher inflation and rising food prices linked to fertilizer shortages and price increases. Ayhan Kose, the World Bank's Deputy Chief Economist and Director of the Prospects Group, highlighted the crisis as an opportunity for governments to strengthen economic resilience through policy enhancements, infrastructure investments, and business-enabling reforms.
The report also underscores growing fiscal pressures in developing economies, noting a significant rise in aggregate government debt, from below 40 percent of GDP in 2010 to over 70 percent. This rising debt is making it increasingly difficult for countries to respond to shocks and invest in long-term priorities such as infrastructure, healthcare, and education.