OECD: Middle East conflict drags down global economic growth prospects

Xinhua News Agency, Paris, March 26 (Reporter Cui Kexin) - The Organisation for Economic Co-operation and Development (OECD) released its latest economic outlook report on the 26th, forecasting a global economic growth rate of 2.9% for 2026, with a slight rebound to 3.0% in 2027. The report points out that the uncertainty in the Middle East poses a challenge to global economic resilience; if energy prices remain high for an extended period, it will significantly increase corporate costs, drive up inflation levels, and dampen the global economic growth outlook.

The report states that prior to the escalation of conflicts in the Middle East, the global economy remained resilient overall, with strong investments and production activities related to artificial intelligence technology, coupled with fiscal policy support, keeping economic activities active. After the escalation of conflicts, soaring energy prices and rising uncertainty in the situation have increased costs and suppressed demand, to some extent offsetting the support previously provided by sustained economic momentum.

The report predicts that the U.S. economic growth rate will slow from 2.0% in 2026 to 1.7% in 2027. Dragged down by high energy prices, the economic growth rate in the Eurozone is expected to drop to 0.8% in 2026, before rebounding to 1.2% in 2027, driven by increased defense spending.

Regarding inflation, mid-term inflation expectations have risen due to soaring energy prices and supply chain disruptions. The inflation rate for G20 countries in 2026 is expected to be 1.2 percentage points higher than previously forecasted, reaching 4.0%, and then falling back to 2.7% in 2027 as energy price pressures ease. The core inflation rate in developed G20 economies is expected to drop from 2.6% in 2026 to 2.3% in 2027.

The report states that the current global economic outlook faces significant uncertainty. The predictions are based on the judgment that global energy supply disruptions will gradually ease after mid-2026. If exports from the Middle East continue to be hindered, it may further drive up energy prices and exacerbate shortages of key commodities, thereby increasing inflation and suppressing growth.

The report emphasizes that against the backdrop of energy price shocks, central banks around the world need to remain vigilant to ensure inflation expectations are stable and to flexibly adjust monetary policy when necessary. Fiscal measures should be precisely targeted to alleviate distress, maintain debt sustainability, while also improving spending efficiency and revenue capacity; strengthen financial regulation to prevent overvaluation and risk transmission; and enhance growth certainty by easing trade tensions to avoid exacerbating inflation with export restrictions. In the medium to long term, improving energy efficiency and reducing reliance on fossil fuel imports should become a priority direction to enhance economic resilience and alleviate cost pressures. (End)