The World Bank has cut its growth forecast for Sub-Saharan Africa in 2026, warning that the fallout from the ongoing US-Iran war is slowing the region’s economic recovery.
The lender now expects the region to expand by 4.1 percent in 2026, unchanged from 2025 but down from its previous 4.4 percent projection in October 2025. The revision reflects the sharp rise in fuel and fertilizer costs triggered by the conflict, combined with heavy debt burdens and uncertainty over investment flows.
The warning comes even as Washington and Tehran agreed on a two-week ceasefire and a temporary reopening of the Strait of Hormuz, a vital shipping corridor for nearly one-fifth of global oil supplies. Yet the US Energy Information Administration cautioned that energy prices could remain elevated for months, keeping pressure on vulnerable economies.
“Since last year, we have seen a much tougher external environment than expected,” said Andrew Dabalen, World Bank chief economist for Africa, during a briefing on Wednesday. “The Middle East conflict has driven energy and fertilizer prices sharply higher, while the length and scale of the disruption remain uncertain.”
Rising costs and constrained fiscal space
Higher energy and agricultural input costs are compounding challenges for countries that are already heavily indebted. According to Dabalen, debt servicing across Africa has doubled, from 9 percent of government revenues in 2017 to approximately 18 percent in 2025. Roughly half of African nations are at high risk of or already in debt distress, limiting their capacity to cushion citizens from price shocks or stimulate growth.
“The fiscal space to deal with this crisis is very limited,” Dabalen said, highlighting the vulnerability of oil-importing economies with constrained budgets.
Fuel and fertilizer shocks are expected to strain household incomes, production costs, and food security, particularly in nations reliant on imports for energy and agricultural inputs. Eastern and southern African countries appear most exposed, with Kenya, Ethiopia, Burundi, Malawi, and Mozambique facing heightened risks. In Kenya, severe scenarios could trigger a sharp inflation spike, while Ethiopia has roughly 750,000 workers employed in Saudi Arabia, potentially exposing the country to remittance volatility if Gulf labour markets are affected.
Investment uncertainty adds to the strain
The conflict has also created uncertainty around foreign investment. Gulf countries have become major investors in Africa, especially in East Africa, supporting sectors such as mining, renewable energy, real estate, and ICT. Prolonged instability could slow capital inflows and put pressure on remittance-dependent economies.
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Dabalen cautioned that while West Africa appears less immediately exposed, incomplete fertilizer data means risks in the region could yet materialize, potentially affecting food security and agricultural output.
“Don’t assume that West Africa will necessarily be unaffected,” he said, noting that fertilization challenges and rising input costs may become more visible in coming months.
Outlook and policy implications
The World Bank emphasized the importance of careful fiscal management, targeted subsidies, and trade measures to mitigate the impact of rising prices. Countries with stronger external buffers and diversified economies may weather the shock better, but highly indebted, oil-importing nations face a difficult balance between supporting households and managing debt sustainability.
As Sub-Saharan Africa confronts these challenges, the combination of rising global costs, debt vulnerabilities, and investment uncertainty is expected to slow momentum for poverty reduction, income growth, and economic resilience, underscoring the region’s exposure to global geopolitical shocks.
