The World Bank’s January forecast, which had expected the global economy to maintain relatively strong growth momentum, has been revised downward. The main reason for the adjustment is the impact of the escalating Middle East conflict, which has disrupted regional energy supplies, increased inflationary pressures and heightened expectations of monetary policy tightening. Global growth is now expected to slow to 2.5 percent in 2026 from 2.9 percent in 2025, the lowest since the onset of the COVID-19 pandemic. Many developed and developing economies will see their economies slow amid weak domestic demand, high uncertainty and elevated geopolitical risks. The outlook for low-income countries has also worsened significantly. In addition to the conflict in the Middle East, instability in the Black Sea and limits on Russian and Ukrainian grain exports have raised concerns about food security.
At the same time, the World Bank expects that growth in AI investment and trade (especially in categories related to AI development) will mitigate the slowdown in growth rates. According to the organization, this will enable the global economy to avoid a deep contraction leading to a crisis. However, the potential risk of an AI bubble is increasingly a top of concern among businesses and investors. This means that even the revised economic growth forecast remains highly uncertain.
The World Explained in Maps