The World Bank expects the weakest global economic growth since the start of the coronavirus pandemic this year, thanks to the ramifications of the Iran war.
The institute has revised its forecast for 2026 downward by 0.1 percentage point to 2.5%, according to a report published by the World Bank. Last year, the global economy grew by 2.9%.
The reasons for the downward revision are high inflation and rising energy prices, after shipping in the Strait of Hormuz virtually ground to a halt as a result of the conflict.
Institute forecasts dire consequences for poor countries
Whilst motorists in richer countries are annoyed by higher petrol prices, the world’s poorest are being hit particularly hard, according to the Washington-based institute.
For economically weak countries, this means that by the end of 2026, a quarter of developing countries will be poorer than in 2019; among low-income countries, the figure is likely to be a third.
According to World Bank projections, around half of fragile and conflict-affected countries will have less money by the end of the year than they did in the year before the start of the coronavirus pandemic.
World Bank plans to provide financial support
At the same time, the World Bank is taking action. Shortly after the crisis began, it made between $20 billion and $25 billion in emergency aid available.
The development bank announced that it would make between $50 billion and $60 billion available to assist governments in developing countries and support agricultural businesses.
Should the crisis persist, the bank said it is prepared to roughly double that figure over a 15-month period
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