US‑Iran Tensions Trigger Global Economic Slowdown Warning

World Bank chief economist Indermit Gill warned that the escalating conflict between the United States and Iran could push global growth down to 1.3 % in 2026 and raise worldwide inflation to about 4.5 %, a "worst‑case scenario" that may arrive within months. The war has driven Brent crude above US$100 per barrel, sharpening fears of higher energy costs and feeding a surge in U.S. Treasury yields to roughly 4.7 %, the highest since early 2025. Higher yields have pressured equity markets, with the S&P 500 heading toward its biggest monthly decline and bond markets worldwide seeing yields climb across the United States, United Kingdom and Germany. In Brazil, the rise in oil prices lifted the local currency and pushed futures rates higher, while Bitcoin slipped about 1.5 % to around US$64,800. Analysts note that the oil‑price shock and inflation expectations are forcing central banks to consider prolonged higher‑interest‑rate policies, which could exacerbate debt burdens for low‑income countries that already face rising financing costs.

Gill emphasized that “the worst‑case scenario is only a few months away,” adding that debt‑laden developing economies may be forced into fiscal tightening, risking cuts to health and education spending. The combined geopolitical and economic pressures are reshaping market sentiment globally.