UN Revises Global GDP Growth Projection for 2026 to 2.5 Percent
Global economy remains under pressure from the crisis in the Middle East, which is slowing growth, reviving inflationary pressures, and increasing uncertainty across financial markets, according to the World Economic Situation and Prospects 2026 Mid-Year Update released by the United Nations on Tuesday 19 May.
Global GDP growth is now projected to 2.5% for 2026, down 0.2 percentage points from the January projection, while a modest recovery is projected at 2.8% in 2027, the report said.
The shocks from the Middle East crisis are felt especially in the energy sector through supply constraints, surging prices, and higher transport and insurance costs, with spillovers across the supply chains and higher production costs globally. While the price surge has brought substantial incidental profits for energy companies, the condition exacerbates cost pressures for households and businesses worldwide.
One area of particular concern is food prices. Fertiliser supply disruptions push up costs, potentially reducing harvests and raising food prices.
The Middle East conflict has halted the global disinflation trend that had been underway since 2023, with inflation projected to rise from 2.6% in 2025 to 2.9% in 2026 in advanced economies, and from 4.2% to 5.2% in developing economies, the report said.
A solid labour market, resilient consumer demand, and AI-powered trade and investment support global activity, but are not expected to fully offset the broader headwinds, with the most challenging prospects facing fuel- and food-importing developing economies.
The impact of the Middle East crisis is highly uneven, with the sharpest effects concentrated in Western Asia, where growth is projected to slow from 3.6% in 2025 to 1.4% in 2026, driven not only by energy shocks but also by direct damage to infrastructure and serious disruptions to oil production, trade, and tourism, the report notes.
In other regions, impacts vary significantly, largely determined by exposure levels and policy response capacity.
“The crisis in the Middle East has amplified pressures on developing economies,” said Li Junhua, Under-Secretary-General of the United Nations who heads the UN Department of Economic and Social Affairs (DESA).
“Rising borrowing costs and new pressures on capital flows risk deepening debt vulnerabilities and constraining resources available for sustainable development at a crucial moment.”