World Bank Readies $100bn Lifeline For Crisis-Hit Economies

The World Bank could scale up financial support to as much as $100bn over the next 15 months to help developing countries withstand the economic fallout from the escalating crisis in the Middle East, the lender has announced, warning that the conflict risks pushing global growth to its weakest level since the COVID-19 pandemic.

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, down from 2.9 per cent in 2025, with forecasts for two-thirds of economies downgraded 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 slowdown is being driven by surging energy prices, rising inflation, and tighter borrowing conditions. The bank said it was immediately making up to $60bn available to the developing countries hardest hit by the crisis, with that figure rising to $100bn over 15 months 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.

“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 $80–100 billion over 15 months,” the lender stated.

The report tied much of the disruption to the closure of the Strait of Hormuz, which has severely strained energy markets. The bank’s baseline scenario assumes Brent crude prices will average $94 per barrel in 2026, with the worst of the supply disruptions abating by July. That projection represents about a 36 per cent increase over 2025 levels. 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.

World Bank Group President Ajay Banga said the burden differed across countries but the underlying challenge was shared. “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,” he said. “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.”

Downside risks remain significant. The report warned that if energy disruptions prove more severe and trigger financial market volatility, global growth could fall as low as 1.3 per cent in 2026, with inflation climbing to 4.4 per cent.

Developing economies are expected to record slower growth this year at 3.6 per cent, down from 4.4 per cent in 2025, before recovering to 4.2 per cent in 2027. Growth in Gulf countries is projected to fall from 3.9 per cent in 2025 to near zero in 2026 before rebounding to around 5 per cent in 2027 and 2028 as trade recovers and reconstruction spending gathers pace.

Sub-Saharan Africa is also expected to face mounting pressures, particularly through higher inflation and rising food costs linked to fertiliser shortages and price increases.

The World Bank’s Deputy Chief Economist and Director of the Prospects Group, Ayhan Kose, framed the crisis as a chance to build resilience. “The conflict has taken a toll on global activity, but every crisis also brings an opportunity,” he said. “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.”

The report also highlighted growing fiscal vulnerabilities across developing economies, noting that aggregate government debt has climbed from less than 40 per cent of GDP in 2010 to more than 70 per cent today, making it harder for countries to absorb shocks and invest in infrastructure, healthcare, and education.