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OECD lowers global growth forecast
The OECD stated that the energy shock linked to the Iran war is suppressing growth and announced weaker global growth forecasts for 2026 and 2027.
The Organisation for Economic Co-operation and Development lowered its global growth outlook and warned that if the effects of the energy shock linked to the Iran war become permanent, the world economy could face a sharper slowdown.
According to the institution's June Economic Outlook report, global growth is expected to decline from 3.4% in 2025 to 2.8% in 2026, then recover to 3.1% in 2027. This scenario assumes that the sharp rise in energy prices will begin to ease by mid-year and that current difficulties will be quickly brought under control.
Highlights
- The OECD lowered its global growth forecast.
- The report noted that disruptions in the Strait of Hormuz and damage to energy infrastructure in the Gulf have driven prices up.
- In the optimistic scenario, growth remains at 2.8% in 2026 and 3.1% in 2027.
- In a worse scenario, global growth could fall to 2.1% in 2026 and 1.8% in 2027.
- The OECD emphasized that this could bring some economies close to or into recession.
OECD Chief Economist Stefano Scarpetta said that in the scenario based on temporary disruption, reaching a peace agreement and quickly resolving issues in the Strait of Hormuz are critical. Otherwise, if problems in maritime transport and energy infrastructure persist until 2027, the growth outlook will deteriorate much more sharply.
According to the institution's assessment, in the worse scenario global growth could drop to 2.1% in 2026 and 1.8% in 2027. Inflation is expected to increase by 0.4 points in 2026 and 1.3 points in 2027 in the same scenario.
Scarpetta said that in such an environment unemployment will rise, investment will weaken, and financial pricing could tighten again in some sectors including energy-intensive areas. It was noted that developing economies could be more severely affected by this process.
The report stated that countries with limited energy reserves, economies where energy and food have a high share in household income, states with limited fiscal capacity, and markets with fragile currencies could face greater pressure.
The OECD pointed out that global central banks are already caught between weak growth and inflationary pressures. The institution emphasized that the crisis shows how dependent the world economy is on a single bottleneck and that supply chain resilience needs to be strengthened.
The report noted that in the short term, emergency demand restraint measures and internationally coordinated strategic energy stocks could somewhat mitigate the effects, but investments to reduce dependence on fossil fuel imports have now become more urgent.
Context: The OECD's assessment reveals that disruptions in energy supply can create a chain reaction not only on prices but also on growth, inflation, investment, and employment.
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