PARIS, France: Global economic growth is projected to ease to 2.9 per cent in 2026 from 3.3 per cent in 2025, before edging up to 3.0 per cent in 2027, the Organisation for Economic Cooperation and Development (OECD) said in its latest Economic Outlook today, reported Xinhua.
The report said that the evolving conflict in West Asia will test the resilience of the global economy.
A prolonged period of higher energy prices would add markedly to business costs, raise consumer price inflation, and have adverse consequences for growth.
Prior to the conflict’s escalation, global growth remained resilient due to strong AI-related investment and production as well as favourable fiscal conditions, the report said.
Following the fighting in West Asia, surging energy prices and heightened uncertainty have raised costs and dampened demand, offsetting earlier growth momentum, it added.
According to the report, economic growth in the United States will moderate from 2.0 per cent in 2026 to 1.7 per cent in 2027, as strong AI-related investment is gradually offset by a slowdown in real income growth and consumer spending.
In the euro area, economic growth is expected to ease to 0.8 per cent in 2026, as higher energy prices weigh on activity, before rising to 1.2 per cent in 2027, supported by stronger defence spending.
On inflation, G20 inflation is projected to be 1.2 percentage points higher than previously expected in 2026, at 4.0 per cent, before easing to 2.7 per cent in 2027 as energy price pressures fade.
Core inflation in G20 advanced economies is expected to decline from 2.6 per cent in 2026 to 2.3 per cent in 2027.
The report said that the global economic outlook remains highly uncertain. The projections were based on the assumption that current disruptions to global energy supply will gradually moderate from mid-2026 onwards.
Persistent disruptions to exports from West Asia could push energy prices even higher, aggravate shortages of key commodities, add to inflation, and reduce growth.
The OECD called for policy vigilance. Central banks should ensure inflation expectations remain well anchored and adjust policy if needed.
Governments are urged to provide targeted support to vulnerable households and viable firms, safeguard debt sustainability, and improve fiscal efficiency.
It also stressed the need for stronger financial oversight, reduced trade tensions, and the avoidance of new export restrictions.
Over the medium term, improving energy efficiency and reducing reliance on imported fossil fuels should be prioritised. – BERNAMA-XINHUA
