OECD: Global Growth Could Slow to 2.1 Per Cent by 2026

The Organisation for Economic Co-operation and Development (OECD) stated on Wednesday that global economic growth in 2026 is expected to slow sharply to 2.1 per cent from 3.4 per cent in 2025, should disruptions caused by conflicts in the Middle East continue until 2027.

In a scenario where disruptions, including those to shipments through the Strait of Hormuz, are only temporary and energy prices begin to ease gradually from mid-2026, the Paris-based organisation estimates global economic growth will slow to 2.8 per cent. This figure is slightly lower than the 2.9 per cent expansion projection provided by the OECD in March, according to its latest economic outlook report.

“The development of the conflict in the Middle East remains uncertain, but the economic consequences are likely to be felt for some time even after the conflict ends,” the OECD explained in its latest analysis, which considers two scenarios: short-term disruption and prolonged disruption.

In the more pessimistic scenario, the OECD expects global economic growth to slow further to 1.8 per cent in 2027. “Unemployment will rise and investment, including investment in artificial intelligence (AI) which requires high energy consumption, will weaken significantly, with increasing risks of price adjustments in financial markets,” the organisation stated.

In its country-specific projections, the OECD only presented estimates based on the short-term disruption scenario. Japan’s economy is expected to grow by 0.6 per cent in 2026, a 0.3 percentage point decrease from the March projection, due to rising energy import costs which pose a challenge for the resource-poor nation.

For the United States, the OECD maintained a growth projection of 2.0 per cent for 2026. The organisation noted that although uncertainty from the Middle East conflict is expected to weigh on household consumption growth, strong investment in the artificial intelligence sector will continue to support the economy.

The OECD also expects China’s economy to grow by 4.5 per cent in 2026, up 0.1 percentage points from previous projections, while the growth projection for the Eurozone remains at 0.8 per cent.

For 2027, the OECD forecasts that global economic growth will recover to 3.1 per cent if the disruptions are relatively brief. In that scenario, the economies of Japan, the United States, China, and the Eurozone are projected to grow by 0.8 per cent, 1.8 per cent, 4.3 per cent, and 1.2 per cent, respectively.