The Organisation for Economic Co-operation and Development warned that escalating Middle East tensions have derailed a stronger global growth trajectory, while inflation risks intensify.
The Paris-based institution said the global economy had been on track for an upgrade. Recent disruptions have erased those gains and heightened uncertainty.
Global GDP growth is now projected to slow to 2.9% in 2026 before a modest recovery to 3.0% in 2027, reflecting energy price pressures.
OECD Secretary-General Mathias Cormann emphasized that uncertainty remains high, with risks skewed toward weaker growth and persistently higher inflation.
The outlook assumes energy market disruptions will gradually ease, allowing oil, gas, and fertilizer prices to decline from mid-2026 onward.
Global growth could fall further while inflation rises sharply, driven by prolonged cost pressures across commodities.
Across major economies, projections diverge, with subdued expansion in Europe and stable but modest growth in Asia, prompting calls for targeted policy responses.
