The World Bank’s latest Global Economic Prospects report paints a picture of an economy buckling under the weight of compounding crises. Global GDP growth is now projected at just 2.5% for 2026, dragged down by the escalating military conflict involving Iran and the cascading energy shock it has unleashed.

That 2.5% figure matters because it represents the kind of growth rate where the global economy is technically expanding but most people on the ground don’t feel it. For emerging markets, it’s even worse: per-capita income growth is projected to be the weakest since the pandemic years.

The Strait of Hormuz problem

When the strait closed on March 4, 2026, Brent crude prices surged past $120 per barrel. The International Energy Agency has characterized the resulting disruption as the largest oil supply shock in history.

The conflict didn’t materialize out of nowhere. Heightened military actions began in 2025 and intensified through early 2026, creating a slow-motion crisis that markets had time to fear but not enough time to prepare for.

World Bank chief economist Indermit Gill has described the conflict’s impact as arriving in “sequential waves,” hitting energy costs first, then food prices, then inflation broadly, and finally debt levels across vulnerable economies. The cumulative growth drag is estimated at 0.2% to 0.4%, with emerging markets absorbing a disproportionate share.

Stacking crises

Iran’s own economy has contracted an estimated 2.7% in the fiscal year ending March 2026, squeezed by both pre-existing disruptions and the conflict’s escalation.

Over 70% of food imports have been disrupted in some Gulf Cooperation Council states. Gulf economies themselves face potential double-digit GDP declines in worst-case scenarios.

The IMF’s April 2026 World Economic Outlook broadly corroborates the World Bank’s grim assessment. The Fund forecasts baseline global growth of 3.1% under a scenario where the conflict is relatively brief, down from a pre-conflict expectation of 3.4%. Under more severe scenarios where hostilities drag on, growth could dip below 2%.

The IMF also estimates a moderate 19% rise in energy commodity prices for 2026 under its baseline assumptions.

What this means for markets and crypto

Rising energy prices increase mining costs for proof-of-work chains. Renewed inflation complicates the interest rate trajectory that has been a key driver of crypto valuations over the past cycle.