As a result of these, the Outlook projects global growth of 2.9 per cent in 2026 and 3 per cent in 2027.
The energy supply shock following the onset of the Iran conflict is expected to significantly weigh on global growth while putting new upward pressure on inflation, according to the latest OECD Interim Economic Outlook.
The document projects global growth of 2.9 per cent in 2026 and 3 per cent in 2027.
Headline inflation in G20 nations is projected at 4 per cent in 2026, easing to 2.7 per cent in 2027.
The evolution of the conflict in the Middle East is highly uncertain and poses considerable risks to these baseline projections.
A more long-lasting disruption, with energy prices remaining elevated beyond mid-2026, would further reduce growth prospects, the document noted.
Gross domestic product (GDP) growth in the United States is projected at 2 per cent in 2026, before moderating to 1.7 per cent in 2027.
In the euro area, growth is projected at 0.8 per cent in 2026 and 1.2 per cent in 2027.
China’s growth is projected to slow to 4.4 per cent in 2026 and 4.3 per cent in 2027.
Inflation pressures will persist for a longer period, with inflation now expected to be higher in 2026 than previously projected, reflecting the surge in global energy prices.
Headline inflation in G20 countries is projected at 4 per cent in 2026, easing to 2.7 per cent in 2027.
“We project global growth will remain robust, but it will be slower than the pre-conflict trajectory, with significantly higher inflation,” OECD secretary general Mathias Cormann said in a release.
“Any policy measures adopted to cushion the impact of the energy price shock should be targeted towards those most in need, temporary, and ensure incentives to save energy are preserved. Increasing renewable energy generation and energy efficiency can enhance economic security while boosting resilience to future price shocks,” he added.
The Outlook highlights key priorities for policymakers. Central banks should remain vigilant and ensure expectations are well-anchored. Stronger efforts are needed to safeguard the sustainability of public finances.
Any measures to cushion the economic impact of the energy shock will need to be targeted, temporary and take into account limited fiscal space facing most governments, it suggested.
Lowering trade barriers would boost output and reduce inflationary risks. Over the medium term, improving energy efficiency and reducing dependency on fossil fuel imports can lower exposure to future supply shocks, the document added.
Fibre2Fashion News Desk (DS)
