The World Bank has warned that the ongoing conflict in the Middle East is having “grave consequences” for economies across the region, particularly in the Gulf, North Africa, Afghanistan and Pakistan.
In a statement issued on Wednesday, the institution highlighted the far-reaching economic fallout, stressing that the crisis underscores the urgent need to strengthen resilience and accelerate job creation across affected countries.
According to the World Bank, the recent escalation has already inflicted “serious and immediate economic losses,” driven by major disruptions including the closure of the Strait of Hormuz and damage to energy infrastructure and public facilities, reports Al-Rai.
These developments have unsettled markets, heightened financial volatility and weakened growth prospects heading into 2026.
The report described the conflict as an additional shock to a region already grappling with structural challenges such as weak productivity growth, slowing private sector activity and persistent labor market pressures.
It called for stronger governance, sound macroeconomic policies and decisive reforms to support sustainable employment and long-term economic stability.
Economic growth across the region is now projected to slow sharply, declining from 4.0 percent in 2025 to 1.8 percent in 2026—2.4 percentage points lower than earlier forecasts issued in January.
The slowdown is expected to be most pronounced in Gulf economies and Iraq, which have been heavily impacted by the crisis. Growth forecasts for Gulf Cooperation Council countries have been revised down by 3.1 percentage points, with expansion now expected to drop from 4.4 percent in 2025 to just 1.3 percent in 2026.
The World Bank cautioned that risks remain firmly tilted to the downside. A prolonged conflict could further intensify economic pressures through rising energy and food prices, declining trade and tourism flows, reduced remittances, and mounting fiscal strain across the region.
