What is the World Bank chief economist's worst-case forecast for global growth in 2026 if Middle East hostilities persist, and what key drivers does he identify?

According to World Bank chief economist Indermit Gill, the worst-case scenario — with hostilities between the U.S. and Iran lasting six months or more — could slash global growth to as low as 1.3% in 2026, down from 2.9% in 2025; this outcome would be driven by reignited inflation (reaching 4.5% headline inflation), higher interest rates, disrupted oil infrastructure, and cascading effects on food insecurity through impaired shipments of fertilizer, helium, and sulphur essential for agriculture.

How does Gill describe the debt vulnerability of low- and middle-income countries amid rising interest rates triggered by the Middle East conflict?

Gill states that 40% of low- and middle-income countries — totaling 32 nations — were already in debt distress or at high risk of it as of the World Bank’s June forecast; he warns this number could rise quickly if interest rates climb further, noting that the average debt-to-GDP ratio for emerging market and developing countries stood at 74% in 2025 (up from ~50–55% pre-pandemic), and for low-income countries at 67% (up from ~40%), with some requiring case-by-case debt forgiveness and others facing a 'slow-moving train wreck' as debt servicing drains resources from education, health, and future growth.

Escalating Middle East war could slash global growth to 1.3% in 2026, World Bank chief economist says

Jul 22, 2026

World Bank chief economist warns escalating US-Iran hostilities could reduce global growth to 1.3% and disrupt supply chains for critical agricultural inputs like fertilizer, helium, and sulphur.

reuters

2026-04-28

World Bank Sees Commodity Prices Hitting Four-Year High in 2026

2026-06-11

World Bank Says Two-Thirds of Economies Face Hit From Iran War

2026-06-11

World Bank cuts global growth outlook to 2.5%, warns of drop to 1.3% if war fallout spreads to markets

2026-06-11

Global Growth Slows to Lowest Level Since Pandemic, Says World Bank

2026-07-01

World Bank Backs Nigeria With $1.25 Billion Development Loan