World Bank lowers 2026 global growth forecast to 2.5 pct

The World Bank on Thursday lowered its global growth forecast to 2.5 percent for 2026, down from 2.9 percent in 2025, marking the lowest rate since late 2019.

The bank's semi-annual Global Economic Prospects report cited higher energy prices, steeper inflation and increased borrowing costs amid the Middle East conflict for the growth cut.

Downside risks are significant, the report warned. Global growth could further slow to 2.1 percent if energy disruptions lasted longer and oil prices averaged 115 U.S. dollars per barrel this year, driving inflation to 4.4 percent. The growth may even worsen to 1.3 percent if the energy shock affected financial markets.

Ongoing uncertainty in trade policies and geopolitical pressures also pose substantial risks. However, broader investment in artificial intelligence (AI) and its applications could boost economic activity levels, according to the report.

The report lowered growth forecast for two-thirds of countries compared with its January report this year, with countries in the Gulf taking the biggest cuts from 3.9 percent in 2025 to close to zero in 2026.

South Asia is expected to have the strongest growth of any region at 6.3 percent in 2026, still a slowdown from 7 percent in 2025.

The report maintained its 2.2 percent growth forecast for the U.S. economy in 2026, although it noted that this figure could drop to 2.1 percent in 2027 and 2 percent in 2028.

Economy in the euro area is expected to grow 0.8 percent in 2026, down from 1.4 percent in 2025. Japan's gross domestic product is forecast to grow 0.7 percent in 2026, down from 1.1 percent in 2025.

The report expects global growth to improve to 2.8 percent in 2027, but this will remain 0.4 percentage points below the average in the 2010s.

While risks remain skewed to the downside amid escalating hostilities, further commodity market disruptions and additional geopolitical strains, the bank holds that policy action is critical.

Globally, the World Bank urges concerned countries to safeguard energy and food security and advance the energy transition. Domestically, it urges all countries to control inflations, strengthen fiscal sustainability and support job creation.

World Bank lowers 2026 global growth forecast to 2.5 pct

Merchants in Hangzhou, the capital city of east China’s Zhejiang Province, have innovatively added new elements to scented sachets, which are traditionally worn during the upcoming Dragon Boat Festival.

As the festival approaches, shops on the famous Hefang Street, a lively ancient thoroughfare that has been the heart of Hangzhou for centuries, are filled with a dazzling array of cultural products, including sachets. There are traditional zongzi (sticky rice dumpling)-shaped designs, as well as plush toys and traditional Chinese-style pendants that appeal to younger generations.

"For me, a pleasant fragrance is all that matters. Some might have a hint of lavender, which I would prefer," said Wang Yunhan, a local citizen.

Fang Huichuntang, a time-honored traditional Chinese medicine brand, has launched plush-style scented sachets that combine cartoon images with Chinese medicinal herbs and innovative flavors. In the past month, this series accounted for 47 percent of total sachet sales at the street stores.

"We collected hundreds of medicinal herbs, selected those with pleasant aromas, and had the (traditional Chinese medicine) director help us make several formulas based on their efficacy. The resulting powdered formulas will have a more refreshing and pleasant aroma, appealing to consumers," said Gou Lulu, cultural and creative product director of Fang Huichuntang.

Many sachets incorporating traditional cultural elements are also selling well, among them one with Dunhuang-mural-inspired colors is particularly eye-catching.

"We found this color very eye-catching, and at the same time, we looked for photos of the costumes of the flying apsaras in Dunhuang on social media platforms to see if our color design could create a similar effect," said Jiang Lingxia, deputy general manager of Hangzhou Hu Qing Yu Tang, another traditional Chinese medicine brand that launched the new sachet.

In addition to purchasing ready-made products, primary and secondary schools in the city have recently organized hands-on activities, leading students to experience the traditional festival culture through the process of making sachets by hand.

Traditional scented sachets refreshed with creative elements for Dragon Boat Festival