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Trump's Iran War Slowing Global Economic Growth to Lowest Level Since Pandemic: World Bank
"For light at the end of the tunnel, you’d have to look to the 2030s," says the World Bank's chief economist.
Jun 11, 2026
The World Bank on Thursday lowered its global growth forecast for the remainder of 2026 as the illegal US-Israeli war of choice on Iran drives up energy prices, inflation, and the cost of debt.
"The global economy is facing another major shock," the World Bank's latest biannual Global Economic Prospects report states. "The conflict in the Middle East has triggered sharp increases in energy prices, renewed inflationary pressures, and fueled expectations of tighter monetary policy."
"Global growth is projected to slow to 2.5% in 2026, from 2.9% in 2025—the lowest rate since the Covid-19 pandemic—amid weaker prospects for economies dependent on energy imports and those directly affected by hostilities," the report continues. "Activity is expected to firm in 2027-28 as energy supplies recover, monetary easing resumes, and trade strengthens."
The Iran War has resulted in the closure of the Strait of Hormuz, through which around 30% of the world’s fertilizer and 20% of its oil previously passed. In addition to increasing the risk of a global food crisis, the strait’s closure has sent fuel and fertilizer prices soaring, with US farm diesel costing nearly 50% more than it did on the war’s eve in February and various fertilizer products spiking by between one-quarter and one-half.
The war has affected the economies of countries far removed from Iran, as the World Bank reports forecasts that "growth in emerging market and developing economies (EMDEs) is expected to slow to 3.6% this year."
"The level of per capita income across EMDEs excluding China and India, relative to advanced economies, is not expected to return to the pre-pandemic level until after 2028, implying nearly a decade of lost income convergence," the international financial institution predicted.
World Bank Group president Ajay Banga said in a statement Thursday that "developing countries have faced a series of challenges over the last decade."
“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," Banga added. "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. Our job is to help countries steady the ship, keep reforms moving, and emerge stronger on the other side.”
The bank said in April that up to $100 billion would be made available over the next 15 months for nations suffering the most acute economic shocks caused by the war.
As US President Donald Trump and Israeli Prime Minister Benjamin Netanyahu allegedly undermine efforts to end the war, the World Bank cautions that the global economic outlook "remains skewed to the downside."
“A renewed escalation of hostilities or more prolonged disruptions to commodity flows could further raise commodity prices, intensify inflationary pressures and food insecurity, trigger financial stress, and lower growth,” the bank's report warns.
In his foreword to the new Global Economic Prospects report, World Bank Group chief economist Indermit Gill warned that "barring a miracle, the 2020s will prove to be what their ominous opening foreshadowed: a lost decade—not just for a couple of outliers, but for dozens of developing economies.'"
"Amid one of the densest clusters of global shocks since the 1970s, nearly 1 out of every 2 developing economies has failed since 2019 to advance on the most rudimentary promise of development: narrowing the income gap with the world’s most prosperous economies," Gill added. "For light at the end of the tunnel, you’d have to look to the 2030s."
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Gaza Needs $71.4 Billion for Recovery as Genocide Sets Development Back 77 Years
Only a tiny fraction of the already inadequate $17 billion pledged for Gaza reconstruction via US President Donald Trump's so-called "Board of Peace" has reportedly been received.
Apr 20, 2026
A joint assessment published Monday by the European Union, United Nations, and World Bank found that an estimated $71.4 billion is needed over the next decade for recovery and reconstruction in the Gaza Strip, where 30 months of Israeli genocide has set human development back by an entire lifetime.
The Gaza Strip Rapid Damage and Needs Assessment (RDNA) states that the $71.4 billion figure includes an estimated $26.3 billion required over the next 18 months "to restore essential service, rebuild critical infrastructure, and support economic recovery."
"Physical infrastructure damages are estimated at $35.2 billion, with economic and social losses amounting to $22.7 billion," the report continues. "The hardest-hit sectors include housing, health, education, commerce, and agriculture. Over 371,888 housing units have been destroyed or damaged, more than 50% of hospitals are nonfunctional, nearly all schools destroyed or damaged, and the economy has contracted by 84% in Gaza."
"Catastrophic impact on human development across Gaza... is estimated to have been set back by 77 years," the RDNA states. "Around 1.9 million people have been displaced, often multiple times, and more than 60% of the population has lost their homes."
"Women, children, persons with disabilities, and those with preexisting vulnerabilities bear the greatest burden," the publication adds.
The new analysis follows a November 2025 UN Conference on Trade and Development report that found Israel's assault on Gaza has caused “the most severe economic crisis ever recorded."
The Israeli war has left more than 250,000 Palestinians dead, maimed, or missing; the strip in ruins; and most of its approximately 2 million people forcibly displaced, starved, or sickened.
“Over two years of conflict has resulted in more than 71,000 Palestinian fatalities and over 171,000 injured, and many are missing under the rubble," the report notes.
With the vast majority of Gaza's buildings damaged or destroyed, separate UN analyses have estimated that it could take as many as 80 years to rebuild the obliterated coastal exclave.
So far, roughly $17 billion in pledged funding has been announced through the so-called "Board of Peace" launched by US President Donald Trump, whose ideas for rebuilding Gaza have included kicking Palestinians out and turning the strip into what he called the "Riviera of the Middle East."
Only a "tiny fraction" of that already inadequate $17 billion has been received, Reuters reported earlier this month.
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The $2 Billion Question: Is World Bank’s IFC Enabling Environmental Damage?
The troubling question isn't whether IFC has environmental policies. It does; the question is whether these policies mean anything when clients consistently fail to comply and the public can't verify whether promised improvements ever materialize.
Dec 14, 2025
When the International Finance Corporation, or IFC—the World Bank's private-sector lending arm—invests in developing countries, it promises to uphold rigorous environmental safeguards. But our new analysis of $2 billion in livestock investments reveals an alarming gap between policy and practice that should concern anyone who cares about climate change, biodiversity loss, and environmental accountability.
Between 2020 and 2025, the IFC pumped nearly $2 billion into 38 industrial meat, dairy, and feed projects across developing countries. These investments expanded factory farming operations at a time when scientific consensus highlights the urgency of transitioning away from industrial livestock production to protect both people and planet.
The troubling question isn't whether IFC has environmental policies. It does—robust ones, in fact, that 56 other development banks and 130 financial institutions use as benchmarks. The question is whether these policies mean anything when clients consistently fail to comply and the public can't verify whether promised improvements ever materialize.
The Compliance Crisis
Our latest report, Unsustainable Investment Part 2, analyzed publicly disclosed environmental risk assessment summaries for all 38 projects, evaluating whether IFC clients adhered to the bank's own requirements for managing biodiversity loss, pollution, and resource use. The findings are sobering.
On biodiversity, most projects offered superficial habitat assessments without the detailed analysis needed to identify critical or natural habitats. Not a single project demonstrated deliberate avoidance of high-value ecosystems—the most important step in preventing irreversible damage. Out of 10 projects facing supply-chain risks from habitat conversion, only 2 reported plans to establish traceability and transition away from destructive suppliers. This matters because industrial livestock threatens over 21,000 species and is the primary driver of deforestation globally.
Without transparent, ongoing disclosure, environmental safeguards become little more than paperwork exercises.
For pollution, the gaps were equally stark. Only one project assessed both ambient conditions and cumulative impacts as required. A few projects also reported exceeding national and international standards for air emissions and wastewater discharge at the time of approval. While many promised future improvements, there's no public evidence these promises were kept. Meanwhile, 29 projects provided no reporting whatsoever on solid waste management compliance—a glaring gap in transparency.
On resource use, the patterns continued. Only one project applied the full water use reduction hierarchy, with most reporting no evidence of even attempting to avoid unnecessary water consumption. This inefficiency is staggering: Industrial livestock uses 33-40% of agriculture's water to produce just 18% of the world's calories.
These findings build on our first Unsustainable Investment report examining client adherence to climate change related requirements. The gaps in adherence to disclosure and mitigation requirements were significant—despite IFC's commitment to align 100% of new investments with the Paris Agreement starting June 2026. For disclosure, while 68% of clients disclosed emissions, the reporting was highly inconsistent. Some reported only Scope 1 or Scope 2; others aggregated both scopes when they should have been separated. For mitigation, over 60% of projects failed to reduce emissions intensity below national averages. And zero projects—out of all 38—managed physical climate risks in their supply chains, despite industrial livestock's extreme vulnerability to climate change.
The Transparency Problem
Perhaps the most concerning discovery is what we couldn't find: evidence of what happens after approval.
IFC's Environmental and Social Action Plans outline corrective measures that clients legally commit to implement over time. Many projects included plans to install pollution controls, improve resource efficiency, or enhance biodiversity management. But IFC doesn't systematically report whether these measures were actually implemented or whether they proved effective.
This absence of verification creates a dangerous accountability vacuum. Without transparent, ongoing disclosure, environmental safeguards become little more than paperwork exercises—compliance theater that manages reputational risk rather than environmental impact.
The Systemic Stakes
This matters far beyond IFC's portfolio. As the world's largest development finance institution focused on emerging economies, IFC functions as a standard setter. When IFC finances industrial livestock expansion despite weak compliance with environmental requirements, it sends a signal to global markets that such investments are "sustainable"—even when evidence suggests otherwise.
Consider the context: Industrial livestock contributes up to 20% of global greenhouse gas emissions, occupies 70% of agricultural land, and drives the planetary boundary transgressions that scientists warn threaten Earth's capacity to support human civilization. The World Bank's own 2024 report, Recipe for a Livable Planet, acknowledges that "to protect our planet, we need to transform the way we produce and consume food."
Yet IFC continues to invest billions in expanding the very systems the World Bank identifies as unsustainable. Civil society organizations have repeatedly documented environmental and social harms from IFC-financed factory farms in Ecuador, Brazil, China, and Mongolia—harm that occurs despite IFC's safeguards being applied.
A Path Forward
This isn't an argument against development finance. It's a call for development finance that actually delivers sustainable development.
IFC must fundamentally reassess whether industrial livestock expansion is compatible with its mission. The institution should redirect financing toward food production systems that are demonstrably sustainable—agroecological approaches, diversified farming systems, and plant-based proteins that can deliver food security without exacerbating environmental crises.
Equally urgent: IFC must mandate full, transparent disclosure of environmental compliance throughout project lifecycles—not just at approval. Independent verification and meaningful consequences for non-compliance must replace the current honor system. Without enforcement, the world's most influential environmental safeguards are effectively optional.
Billions in public development finance continue flowing to industrial operations that drive climate change, biodiversity collapse, pollution, and resource depletion.
The stakes extend beyond any single institution. With IFC's president announcing plans to double annual agribusiness investments to $9 billion by 2030, and the Paris Agreement alignment deadline now extended to June 2026, the window for course correction is rapidly closing.
As 130 financial institutions benchmark their own environmental standards against IFC's Performance Standards, the compliance failures we've documented likely exist throughout the development finance sector. Systemic problems require systemic solutions.
The Bottom Line
The evidence is clear: IFC's environmental safeguards are robust on paper but weakened by inconsistent client adherence, limited transparency, and absent enforcement. The current approach manages compliance risk rather than environmental impact—a fundamental misalignment with both IFC's stated mission and the urgent imperatives of our environmental moment.
Seven of nine planetary boundaries have already been breached. The Earth system is under unprecedented stress. Yet billions in public development finance continue flowing to industrial operations that drive climate change, biodiversity collapse, pollution, and resource depletion.
The question isn't whether IFC can afford to change course. It's whether we can afford for it not to.
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