Global Economic Growth Slows to 2.5%, Weakest Figure Since COVID-19 Pandemic

The World Bank has revised its 2026 global growth forecast down to 2.5%, marking the weakest expansion since the COVID-19 pandemic and a 0.1 percentage point reduction from its January estimate. The downgrade reflects the cumulative drag of elevated energy prices, tightening financial conditions, and persistent geopolitical uncertainty tied to the ongoing Middle East conflict, which has disrupted energy supply chains and rekindled inflationary pressure across major economies.

The bank's baseline scenario assumes an average Brent crude price of roughly $94 per barrel for the year, up approximately 36% from 2025 levels, and projects global headline inflation climbing to around 4%. The institution warned that forecasts were cut for roughly two-thirds of countries, with the sharpest revisions concentrated in energy-dependent and emerging-market economies most exposed to commodity price swings. In a downside scenario where supply disruptions intensify and trigger financial-market stress, global growth could fall as low as 1.3%.

The World Bank cautioned that the current trajectory risks a "lost decade" of income convergence for many developing economies. Excluding China and India, emerging-market and developing nations are on course to fall further behind advanced economies in per-capita income by 2028, reversing years of catch-up progress. Trade growth is also expected to weaken as firms reduce inventory buildup and the full effect of elevated trade barriers and policy uncertainty feeds through to business investment.

India is a notable exception to the global gloom. The World Bank reaffirmed a 6.6% growth projection for India's FY27, supported by resilient domestic demand and improving exports, with a potential acceleration to 7.2% the following year. The country's diversified economic base and comparatively lower energy import intensity relative to GDP have helped it absorb the external shock better than most peers. Even so, the bank flagged that India's outlook remains vulnerable to further commodity price escalation and slower global trade volumes.