OECD Forecasts Global Economy to Grow Only 2.9% in 2026 Due to Iran War Effects

Jakarta, CNBC Indonesia - Global Gross Domestic Product (GDP) growth is projected to slow from 3.3% last year to 2.9% in 2026, before it is expected to rise to 3.0% in 2027.

This projection was presented by the Organization for Economic Cooperation and Development (OECD) in the OECD Economic Outlook, Interim Report titled Testing Resilience, which was released last week (26/3/2026).

“The conflict in the Middle East is testing global economic resilience. The outlook is shrouded in high uncertainty and reflects the interaction of two opposing forces,” OECD wrote in its report, quoted on Monday (30/3/2026).

First, on the positive side, the OECD sees growth supported by strong momentum in technology-related investment and production, lower tariffs than previously assumed, and the continuation of strong results from 2025.

Meanwhile, on the negative side, the halt of shipments through the Strait of Hormuz and the closure and damage to some energy infrastructure have caused a surge in energy prices and disrupted global energy supplies and other key commodities, such as fertilisers.

“This increases costs, suppresses demand, and adds pressure to inflation,” OECD stated.

Inflation in G20 countries is also expected to rise to 4% in 2026. This condition is triggered by pressure on oil prices. The inflation rate will slow again in 2027, with a projection to drop to 2.7%.

Meanwhile, core inflation in advanced G20 countries is expected to weaken, from 2.6% in 2026 to 2.3% in 2027.

In its report, the OECD emphasised that market expectations indicate a gradual decline in energy prices, an assumption underlying the current projections. However, the OECD warned that prolonged disruptions to shipments through the Strait of Hormuz or sustained closures of oil and gas facilities could lead to far worse outcomes.

The OECD also created a simulation in this report exploring a scenario where oil and gas prices rise far above the baseline projection - about a quarter higher in the first year and remaining high thereafter - combined with tighter global financial conditions.

“In this case, global GDP could be around 0.5% lower in the second year, while consumer prices would be about 0.7 percentage points higher in the first year and 0.9 percentage points in the second year,” OECD stated.