The global economy has come through the oil shock from the Middle East conflict better than expected but inflation continues to haunt the recovery.
The OECD’s Interim Economic Outlook, released overnight, predicts global growth of 2.9 percent in 2026 and 3.0 percent in 2027.
However, it warns that the evolution of the conflict remains “highly uncertain” and this continues to pose considerable risks to the baseline projections.
“The impact of the oil shock has been cushioned by greater use of alternative supply routes, inventory drawdowns, additional production outside the Gulf, and lower oil demand, particularly from China,” the outlook said.
“Strong investment in artificial intelligence continues to support trade and economic growth.”
The OECD projects growth in the United States to be at 2.2 percent in 2026 before moderating to 2.1 percent in 2027.
In the euro area, growth is projected to be 1 percent in both 2026 and 2027. China’s growth is projected to be 4.5 percent in 2026 and 4.2 percent in 2027.
“Inflation pressures will persist, with G20 inflation now expected to be higher in 2026 and 2027 than previously projected, reflecting the surge in global energy prices,” the report said.
“Inflation in the G20 economies is projected to be 4.1 percent in 2026, easing to 3.6 percent in 2027.”
OECD Secretary-General Mathias Cormann said, while global growth had held up better than expected, the buffers that absorbed the energy shock were being depleted.
“Growth is weaker than last year and inflation is rising again,” he said.
“Governments need to target support where it is most needed and get public spending on a sustainable track. They also need to build long term growth foundations, with stronger skills, more diversified energy supplies and faster AI adoption.”
The OECD is a global policy forum that promotes policies to preserve individual liberty and improve the economic and social well-being of people around the world.
The full report is here
