{"id":63030,"date":"2026-06-11T19:38:15","date_gmt":"2026-06-11T23:38:15","guid":{"rendered":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/world-bank-slashes-global-growth-forecast-amid-middle-east-conflict-japan-and-uk-launch-defense-tech-fund\/63030\/"},"modified":"2026-06-11T19:38:15","modified_gmt":"2026-06-11T23:38:15","slug":"world-bank-slashes-global-growth-forecast-amid-middle-east-conflict-japan-and-uk-launch-defense-tech-fund","status":"publish","type":"post","link":"https:\/\/www2.stockmarketwatch.com\/stock-market-news\/world-bank-slashes-global-growth-forecast-amid-middle-east-conflict-japan-and-uk-launch-defense-tech-fund\/63030\/","title":{"rendered":"World Bank Slashes Global Growth Forecast Amid Middle East Conflict; Japan and UK Launch Defense Tech Fund"},"content":{"rendered":"<h2>Key Takeaways<\/h2>\n<ul>\n<li><strong>The World Bank slashed its 2026 global growth forecast to 2.5%<\/strong>, citing the severe economic fallout from the ongoing conflict in the Middle East, marking the weakest performance since the COVID-19 pandemic.<\/li>\n<li><strong>Global growth could collapse to 1.3%<\/strong> if energy supply disruptions intensify and trigger a significant crisis in international financial markets.<\/li>\n<li><strong>Japan and the United Kingdom are establishing a joint startup support fund<\/strong> dedicated to &quot;dual-use&quot; technologies, including <strong>Artificial Intelligence (AI)<\/strong>, <strong>quantum computing<\/strong>, and <strong>drones<\/strong>.<\/li>\n<li><strong>The fund targets an initial contribution of 1 billion yen ($6.23 million)<\/strong> to deepen defense cooperation and secure supply chains for critical advanced technologies.<\/li>\n<li><strong><a href=\"https:\/\/stockmarketwatch.com\/energy\/crude-oil\" data-internallinksmanager029f6b8e52c=\"12\" title=\"Crude oil\">Oil prices<\/a> are projected to average $94 per barrel<\/strong> in 2026\u2014a 36% increase from 2025\u2014fueling renewed inflationary pressures and expectations for tighter monetary policy.<\/li>\n<\/ul>\n<p>The global economic outlook has darkened significantly as the World Bank warns of a &quot;lost decade&quot; for developing nations. In its latest <strong>Global Economic Prospects<\/strong> report released Thursday, the multilateral lender reduced its 2026 worldwide growth estimate by 0.1 percentage point to <strong>2.5%<\/strong>, down from <strong>2.9%<\/strong> in 2025. The downgrade reflects the impact of the four-month-old conflict in the Middle East, which has disrupted the <strong>Strait of Hormuz<\/strong> and sent energy and fertilizer prices skyrocketing.<\/p>\n<p>The World Bank&#39;s baseline scenario assumes that the worst of the energy disruptions will abate by late July. However, economists warned that if oil prices average <strong>$115 per barrel<\/strong>, global inflation could climb to <strong>4.4%<\/strong>, further stifling growth to <strong>2.1%<\/strong>. World Bank President <strong>Ajay Banga<\/strong> announced that the institution is making up to <strong>$60 billion<\/strong> in immediate liquidity available to the hardest-hit developing countries to mitigate the shock.<\/p>\n<p>Amid these rising geopolitical tensions, <strong>Japan<\/strong> and the <strong>United Kingdom<\/strong> are pivoting toward technological self-reliance. The two nations plan to sign a memorandum of understanding to launch a fund supporting startups that develop <strong>dual-use technologies<\/strong>\u2014innovations with both civilian and military applications. This collaboration will be formalized during a summit in London, involving the <strong>Japan External Trade Organization (JETRO)<\/strong> and the UK&#39;s <strong>Innovate UK<\/strong>.<\/p>\n<p>The new fund will focus on high-growth sectors such as <strong>quantum technology<\/strong>, <strong>space<\/strong>, and <strong>autonomous drones<\/strong>. By matching Japanese and British startups with international investors, the initiative seeks to prevent Japan from becoming an <em>&quot;AI colony&quot;<\/em> and to bolster the UK&#39;s burgeoning defense-tech ecosystem. This move follows recent private sector momentum, such as SoftBank Group&#39;s (<a href=\"\/stock\/SFTBY\">SFTBY<\/a>) significant investments in autonomous driving and AI research.<\/p>\n<p>Market participants are closely monitoring the intersection of defense spending and economic stability. While the World Bank warns that two-thirds of the world&#39;s economies face downward revisions, the strategic focus on defense technology by major powers suggests a shift in capital toward <strong>national security<\/strong> and <strong>resilient supply chains<\/strong>. High-tech firms like BAE Systems (<a href=\"\/stock\/BAESY\">BAESY<\/a>) and Mitsubishi Heavy Industries (<a href=\"\/stock\/MHVYF\">MHVYF<\/a>) remain at the forefront of this industrial realignment as governments prioritize dual-use innovation.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Key Takeaways The World Bank slashed its 2026 global growth forecast to 2.5%, citing the severe economic fallout from the 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