Global growth is likely to take a noticeable hit from the ongoing Middle East conflict, even if a ceasefire holds, according to an interview given by World Bank President Ajay Banga to Reuters.

Banga warned that the economic fallout from the war is already feeding into weaker global expansion, with ripple effects expected across both advanced and emerging economies. Even under a baseline scenario where a ceasefire — announced by US President Donald Trump — takes hold, global growth could be shaved by 0.3 to 0.4 percentage points.

The risks deepen significantly if the conflict drags on. In a prolonged-war scenario, global growth could decline by as much as 1 percentage point, underscoring the fragility of the recovery and the sensitivity of markets to geopolitical shocks, he said.

Emerging markets and developing economies are expected to bear a disproportionate share of the slowdown. The World Bank now projects growth for these economies at 3.65% in 2026, down from an earlier estimate of 4% made in October. In a more adverse scenario tied to a prolonged conflict, growth could fall sharply to 2.6%.

At the same time, inflationary pressures are intensifying, compounding the growth challenge. Inflation in emerging and developing economies is now forecast at 4.9% in 2026, up from a previous estimate of 3%. In a worst-case scenario, inflation could surge as high as 6.7%, reflecting supply disruptions and higher energy costs linked to the conflict.

Banga cautioned that while a ceasefire may limit the damage, the cascading economic impact of the war is already underway — and will be far more severe if hostilities escalate further.