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OECD: Iran War Erases Global Economic Growth Expectations, Intensifies Inflation
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The Organisation for Economic Co-operation and Development (OECD) warned on Thursday that escalating conflicts in the Middle East have derailed the global economy from a stronger growth trajectory, as energy transport through the Strait of Hormuz nearly comes to a halt, driving up inflation. Before the outbreak of the Iran war, the global economy was expected to achieve stronger-than-anticipated growth, but that outlook has now nearly vanished. Global GDP growth is now expected to slow from last year's 3.3% to 2.9% in 2026, before rebounding to 3% in 2027. With energy prices soaring, inflation in the G20 is projected to be 1.2 percentage points higher than previously expected this year, reaching 4%, before declining to 2.7% in 2027. For individual economies, the annual GDP growth rate in the US is expected to slow from 2% in 2026 to 1.7% in 2027, as strong investments related to artificial intelligence are gradually offset by slower real income growth and consumer spending. The overall inflation rate in the US is now forecasted to reach 4.2% in 2026, up by 1.2 percentage points from previous predictions. In China, economic growth is expected to slow to 4.4% this year and 4.3% in 2027, both in line with previous OECD forecasts. Eurozone GDP growth is projected to decline to 0.8% in 2026 due to pressure from rising energy prices on economic activity, before rebounding to 1.2% in 2027 due to increased defense spending, a significant downgrade from the December forecast when the OECD predicted growth of 1.2% in 2026 and 1.4% in 2027. In Japan, economic growth for 2026 and 2027 is expected to remain unchanged at 0.9%, as rising energy import costs offset strong corporate investment. (to/m) Auto-translated by third-party software This translation was auto-generated by third-party software. AASTOCKS.com Limited does not guarantee its accuracy or completeness and accepts no liability for any damages or losses arising from the use of this translation. More Details
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