The conflict in the Middle East is not hitting all regions equally. That much is clear from the World Bank's June 2026 regional breakdown. But it is hitting all of them — and in most cases, the 2026 growth projections have been cut from what was expected just six months ago.
The clearest casualty is the Middle East, North Africa, Afghanistan, and Pakistan (MNA) region, where several economies are directly involved in hostilities. Growth there is forecast to collapse from 3.9 percent in 2025 to just 1.6 percent in 2026 — a downgrade of 2.7 percentage points from January's projections. Damaged energy infrastructure, disrupted trade routes, and sharp drops in investment are the main drivers. The human cost compounds the economic one.
East Asia and Pacific takes the next-largest hit among major regions. Growth is projected at 4.2 percent in 2026, down from 5 percent in 2025. China is relatively sheltered — large petroleum reserves, high renewable capacity, and government fuel price caps limit the damage. But elsewhere in the region, economies like the Philippines, Thailand, and Vietnam face the full brunt of higher energy import costs. The Philippines, in particular, has seen its 2026 growth forecast cut by 1.6 percentage points. On the positive side, strong demand for electronics and semiconductors continues to support several EAP exporters, and countries embedded in AI-related supply chains are still recording steady export growth.
South Asia is expected to remain the fastest-growing EMDE region through the forecast period, largely because of India's continued momentum. But the region is still exposed. Its heavy reliance on energy imports from the Middle East makes it vulnerable to the ongoing supply shock, and tighter monetary conditions are expected to weigh on investment.
Europe and Central Asia presents a mixed picture. Growth slows to 2.1 percent in 2026 — down from 2.5 percent in 2025 — with most of the damage concentrated in net energy importers. Romania, Turkey, Moldova, and Ukraine face the steepest downward revisions. Russia, by contrast, sees oil revenue gains, though these are expected to go toward fiscal consolidation rather than boosting domestic demand. Inflation across the region has moved back above pre-pandemic levels and above most central bank targets, which narrows the space for monetary easing.
Latin America and the Caribbean has, so far, shown more resilience than might be expected. Several major LAC economies are net energy exporters — Brazil, Colombia, Ecuador — and are actually benefiting from higher oil prices through improved export revenues. Financial markets have remained broadly stable, partly because much of the region's sovereign debt is denominated in local currency. Growth slows modestly to 2.2 percent in 2026. Mexico is the notable weak spot, facing external demand softness and ongoing uncertainty around USMCA renegotiations.
Sub-Saharan Africa faces a different set of vulnerabilities. Debt levels are high, official development assistance is declining — net ODA fell 23 percent in 2025, the largest annual drop on record — and food insecurity was already at elevated levels before the conflict. SSA already has the highest incidence of severe food insecurity among EMDE regions, and the conflict threatens to push that figure higher through rising fertilizer costs and disrupted supply chains. The Ebola outbreak in the Democratic Republic of Congo and Uganda, declared in May 2026, is an additional pressure point that the World Bank flags as a meaningful downside risk, particularly given that the Bundibugyo strain currently has no approved vaccine.
Across all regions, the recovery projected for 2027–28 is conditional on one key assumption: that the most acute phase of commodity disruptions ends by July 2026, with shipping through the Strait of Hormuz gradually normalizing thereafter. If that assumption does not hold, the downgrades in this report will not be the last.
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Written By Samyak Naik
