Protracted war in Iran could drag on global growth, push up inflation, OECD warns
The OECD warns that the ongoing war in the Middle East could significantly impact global economic growth and inflation. If the conflict persists, global growth may slow to rates not seen since major crises, with some economies potentially entering recession. The organization highlights the human cost of inflation, as many workers face declining living standards due to rising prices.
- ▪The OECD predicts global growth could slow to 2.1 percent in 2026 if energy disruptions continue.
- ▪Higher energy prices could increase global inflation by 0.4 percentage points in 2026 and 1.3 percentage points in 2027.
- ▪Around one-third of OECD economies are expected to experience negative real wage growth this year.
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ShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountThe global economic outlook hinges on how long the war in the Middle East lasts, with recession in some countries and sharply higher inflation a real possibility if it drags on into next year, the Organization for Economic Co-operation and Development warned on Wednesday.If the conflict proves short-lived, Gulf oil and gas production could gradually return to pre-crisis levels from the third quarter with shortages confined to Asia and cushioned by strategic reserves and shipments from other producers.In that baseline scenario, global growth is projected to slow from 3.4 per cent in 2025 to 2.8 per cent in 2026 before picking up to 3.1 per cent in 2027, broadly in line with the OECD’s March forecasts.“The…
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