Economic Buzz: World Bank cuts global growth forecast for 2026 to 2.5%

The World Bank has cut its global growth forecast for 2026 to 2.5%, saying that the slowdown is the worst hit to the global economy since the COVID-19 pandemic as soaring energy prices from war in the Middle East fuel a new round of inflation. It noted that after expanding at a 2.9% rate in 2025, the world economy is now projected to slow further, with the 2026 figure representing the weakest growth rate recorded since the COVID-19 pandemic first emerged. The revised forecast comes in 0.1 percentage point below what the bank had expected in January. The bank noted that growth could fall to just 1.3% if energy supply disruptions intensify and financial markets come under stress. Growth in emerging market and developing economies (EMDEs) is expected to slow to 3.6% this year. The level of per capita income across EMDEs excluding China and India, relative to advanced economies, is not expected to return to the pre-pandemic level until after 2028, implying nearly a decade of lost income convergence.

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