The World Bank has issued a stark warning that a further escalation of the conflict between the United States and Iran could drive global economic growth in 2026 down to just 1.3 percent.
Chief Economist Indermit Gill highlighted the severe downside risks to the global outlook, suggesting that a broader crisis is a tangible possibility if geopolitical tensions in the Middle East continue to deteriorate.
The warning underscores the fragility of the current economic recovery, which remains highly sensitive to supply chain disruptions and energy market volatility.
A direct confrontation between the US and Iran would likely trigger sharp spikes in oil prices and disrupt critical shipping routes, imposing immediate costs on importers and consumers worldwide.
For investors, the signal is clear: geopolitical risk premiums are likely to remain elevated as markets price in the potential for a hard landing in global growth.
This assessment comes against a backdrop of intensifying violence in the wider region.