Thanks to Stalled Economic Growth, a 'Lost Decade' Looms

Economic storm clouds, not sunshine, dominate the World Bank's latest outlook. The lender cut its 2026 global growth forecast to 2.5%, the weakest pace since the pandemic, citing the Middle East war's hit to energy exports and prices, reports Reuters. Global growth reached 2.9% in 2025. In the bank's baseline prediction, Brent crude oil averages $94 a barrel this year, while global inflation hovers around 4%. Although the bank downgraded its forecasts for two-thirds of the world's nations, the US, which started the Iran war with Israel in late February, stayed mainly on track, with an anticipated growth rate of 2.2%, which is the same as had been forecast in January, per the AP.

The bank outlines even darker paths, per Reuters: A prolonged energy crunch could slow global growth to 2.1%, and if market stress piles on, expansion could sink to 1.3%. Developing economies are bearing the brunt, with growth this year projected at a post-COVID low of 3.6% and many facing a "lost decade" of stalled economic catch-up with rich nations. "War anywhere is bad for poor people everywhere," World Bank chief economist Indermit Gill tells the Wall Street Journal. India remains a rare bright spot, with a GDP that's forecast to grow at 6.6% this year, while the Middle East's predicted rate fell to 1.6%, per Reuters.