The ongoing conflict in the Middle East will lower global economic growth to 2.5% by 2026. This marks the lowest growth rate since the beginning of the COVID-19 pandemic, according to a new World Bank report.
This slowdown stems from projected higher energy prices, steeper inflation, and increased borrowing costs worldwide. Two-thirds of all global economies have seen their growth forecasts downgraded since January of this year. Weak growth in developing countries has stopped their progress in catching up to richer nations.
This trend affects Ghana directly and indirectly through global trade and financial market disruptions. Ghana, like many Sub-Saharan African nations, is particularly vulnerable to rising food and energy prices. High inflation pressures are already a significant concern across the continent.
Ajay Banga, President of the World Bank Group, highlighted the urgent need for action. He stated, “Developing countries have faced a series of challenges over the last decade.” Banga added, “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.”
The economic fallout points to continued volatility and potential instability for many nations. Policymakers must focus on strategies to manage commodity price fluctuations and reduce rising debt levels. The World Bank is providing up to $60 billion in immediate liquidity to help countries stabilize their economies.
Specifically, Brent crude oil prices are estimated to average $94 per barrel in 2026, an increase of 36% from 2025 levels. Fertilizer prices are also expected to rise significantly this year. These increases will push global inflation to 4.0% this year, up from 3.3% in 2025.
Growth in developing economies is projected to fall to 3.6% this year, the lowest since the pandemic. This figure is down from 4.4% in 2025. While a recovery to 4.2% is expected by 2027, this still remains below pre-conflict trends.
Sub-Saharan Africa's growth is also decelerating, primarily due to inflationary pressures. High food prices, driven by fertilizer shortages, pose a major challenge for the region. Ayhan Kose, the World Bank Group’s Deputy Chief Economist, stressed the opportunity for reform. He noted, “This moment should be used to strengthen policy frameworks, invest in infrastructure, accelerate business-enabling reforms, and mobilize private capital.”
The report also detailed fiscal challenges in developing economies. Many commodity-exporting nations, including nearly 90% of low-income countries, possess weaker fiscal positions. These countries often spend commodity windfalls instead of saving them to build stronger financial cushions.
Rising debt levels further complicate the ability of countries to respond to crises. Government debt in developing economies has climbed from under 40% of GDP in 2010 to over 70% of GDP. Highly indebted countries face higher borrowing costs, limiting their capacity for essential investments in infrastructure, health, and education.