Iran war is the worst hit to the global economy since covid, World Bank says

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🗞️ Driving the news: The U.S.-led war on Iran is slashing global growth, with the World Bank warning of the largest economic shock since COVID-19
• Supply disruptions in oil, gas, and fertilizers from the Strait of Hormuz have triggered soaring costs worldwide, hitting developing nations hardest and threatening a decade of stagnation in vulnerable economies

🔭 The context: World output is now projected to grow 2.5% in 2026, down from 2.9% in 2024–25
• Countries bordering the Persian Gulf, including Kuwait, Iraq, and Qatar, could see near-zero growth
• Major exporters like the U.S. and China remain relatively resilient due to AI investments and industrial scale, but growth in Europe, Japan, and many developing nations is slowing sharply

🌍 Why it matters for the planet: The conflict exacerbates energy instability and reliance on fossil fuels, driving higher carbon-intensive production costs
• Elevated oil and gas prices risk prolonging fossil fuel use, slowing the clean energy transition, and undermining climate commitments, especially for nations struggling to balance economic recovery with emissions reductions

⏭️ What’s next: The World Bank assumes trade in Middle East energy normalizes by July, with Brent crude averaging $94 per barrel•
If hostilities continue, oil could spike to $115/barrel, reducing global growth to 2.1%, or as low as 1.3% under a severe energy shock
• Emergency financing of $50 billion is being deployed to support developing countries, with potential doubling if the crisis persists

💬 One quote: “The world economy is a lot less resilient today.” – Indermit Gill, Chief Economist, World Bank

📈 One stat: Annual global growth could fall from 2.5% to 1.3% if the war-induced energy shock worsens, the lowest rate since the onset of COVID-19

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