Middle East crisis: W’Bank readies $100bn support for developing nations

The World Bank has said it could scale up financial support to as much as $100bn over the next 15 months to help developing countries cope with the economic fallout from the escalating crisis in the Middle East.

The commitment comes as the lender warned that the conflict could push global economic growth to its weakest level since the COVID-19 pandemic, driven by surging energy prices, rising inflation, and tighter borrowing conditions.

In its latest Global Economic Prospects report released on Thursday, the World Bank projected that global growth would slow to 2.5 per cent in 2026 from 2.9 per cent in 2025, with forecasts for about two-thirds of the world’s economies revised downward since January. Growth is expected to recover modestly to 2.8 per cent in 2027 but remain below the average recorded during the 2010s.

The World Bank said it was immediately making between $50bn and $60bn available through existing financing instruments, including $25bn in pre-arranged funding. The resources are expected to support social safety nets, strengthen government finances, and provide liquidity for businesses and farms affected by the crisis.

“To date, over 30 countries are actively working with the World Bank Group to enhance readiness and enable a rapid response to the crisis under this response plan. If the conflict and its economic fallout persist, the World Bank Group can scale up its support to $80–100bn over 15 months,” the lender stated.

According to the report, the closure of the Strait of Hormuz has severely disrupted energy markets, with Brent crude oil prices forecast to average $94 a barrel in 2026, about 36 per cent higher than in 2025, assuming the worst supply disruptions ease by July.

The bank also warned that higher fertiliser prices would likely feed into food inflation, lifting global inflation to an estimated 4.0 per cent this year, up from 3.3 per cent in 2025.

“Developing countries have faced a series of challenges over the last decade,” World Bank Group President Ajay Banga said.

“The impact differs by country, but the basic test is the same: protect people and preserve stability today, without giving up on growth and jobs tomorrow. In response to the current shock, we are providing liquidity where it is needed now, and we are ready with additional financing, guarantees, and private-sector solutions if pressures deepen,” he added.

The report noted that downside risks remain significant. It warned that if energy supply disruptions worsen and trigger financial market stress, global growth could slump further to 1.3 per cent in 2026, while inflation could climb to 4.4 per cent.

Developing economies are expected to see growth slow to 3.6 per cent this year from 4.4 per cent in 2025 before recovering to 4.2 per cent in 2027. Gulf economies directly affected by the conflict are projected to experience the sharpest slowdown, with growth falling from 3.9 per cent in 2025 to nearly zero in 2026 before rebounding to around 5 per cent in 2027 and 2028 as trade resumes and reconstruction efforts gather pace.

Sub-Saharan Africa is also expected to feel the impact of the crisis, particularly through higher inflation and rising food prices linked to fertiliser shortages and price increases.

The World Bank’s Deputy Chief Economist and Director of the Prospects Group, Ayhan Kose, said the crisis should also serve as an opportunity for governments to strengthen economic resilience.

“The conflict has taken a toll on global activity, but every crisis also brings an opportunity. This moment should be used to strengthen policy frameworks, invest in infrastructure, accelerate business-enabling reforms, and mobilise private capital to support job creation at scale,” he said.

The report also highlighted growing fiscal pressures across developing economies, noting that aggregate government debt has risen from below 40 per cent of gross domestic product in 2010 to more than 70 per cent.

It warned that rising debt levels are making it increasingly difficult for countries to respond to shocks and invest in long-term priorities such as infrastructure, healthcare, and education.