Within a few weeks of each other, the Bank for International Settlements and the World Bank published their assessments of the global financial system. The two institutions do not speak the same language — one looks at financial stability, the other at growth and development — yet they converge on a single diagnosis: the energy shock triggered by the closure of the Strait of Hormuz has reopened an inflationary cycle in economies whose fiscal room has already been exhausted.
World Bank: the weakest growth since the pandemic
In its June 2026 Global Economic Prospects report, the World Bank cuts global growth to 2.5 % for 2026, down from 2.9 % in 2025 — the slowest pace since the health crisis. Forecasts have been revised down for two thirds of economies compared with January.
| Indicator | 2025 | 2026 (forecast) | 2027 (forecast) |
|---|---|---|---|
| Global growth | 2.9 % | 2.5 % | 2.8 % |
| Developing economies | 4.4 % | 3.6 % | 4.2 % |
| Global inflation | 3.3 % | 4.0 % | — |
| Brent (annual average) | — | 94 dollars a barrel | — |
The average Brent price expected for 2026 stands 36 % above the 2025 level. Even South Asia, the most dynamic region, slows markedly: from 7 % in 2025 to 6.3 % in 2026. The Middle East and North Africa region falls to 1.6 %.
BIS: four pressure points
The BIS Annual Economic Report 2026, published on 28 June, identifies four sources of vulnerability that in its view call for immediate action.
- The return of inflation. In a world of more frequent supply shocks, the risk is that inflation becomes entrenched if expectations de-anchor — including after energy flows normalise.
- The sustainability of the AI boom. The BIS warns against over-investment driven by competition for market leadership, a pattern already seen in previous innovation waves.
- Financial vulnerabilities. Liquidity in core bond markets appears more fragile, against a background of stretched valuations and increasingly leveraged AI financing.
- Strained public finances. Near-record debt and higher interest rates leave little room to respond to the next recession.
The new sovereign–financial stability nexus
This is the report’s most original contribution. The BIS describes an unprecedented nexus between public finances and financial stability: record public debt now combines with the growing role of highly leveraged hedge funds in sovereign bond markets. The result is potentially more frequent and sharper drops in government bond values.
The sequence runs as follows: a bond repricing tightens financial conditions quickly, weighs on demand with uncertain effects on inflation, and complicates the calibration of monetary policy. It may also force central banks to intervene to calm markets — at the cost of weakening both market discipline and fiscal discipline.
The BIS insists on one methodological point: strengthening financial stability beyond the banking perimeter. Institutions are supervised; the non-bank actors that amplify the transmission of market stress are far less so.
What this means for you
- Revisit your stress scenarios on the sovereign portfolio. The assumption of a deep and liquid government bond market in all circumstances is precisely what the BIS is questioning.
- Bring non-bank counterparty risk into your mapping. Highly leveraged funds and AI financing chains are indirect exposures that few institutions track explicitly.
- Reopen your inflation and rate assumptions in three-year plans. Global inflation at 4 % in 2026 invalidates a good part of the business plans built in 2025.
Helios Advisory helps financial institutions read regulatory and macroeconomic developments and translate them into operational terms. Explore our services.
Sources
- Global economic pressure points call for policy discipline — Bank for International Settlements, 28 June 2026
- Middle East Conflict Sends Global Growth to Lowest Rate Since COVID-19 — World Bank, 11 June 2026
- Global Economic Prospects, June 2026 — World Bank, full report
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