OECD Forecasts Resilient 2.9% Growth for 2026 Amid Middle East Conflict

The Organization for Economic Cooperation and Development (OECD) announced Wednesday that it has upgraded its global economic growth projection for 2026 to 2.9%, a rise of 0.1 percentage points from its June estimates. The Paris-based think tank described the global economy as “resilient,” noting that financial conditions remain supportive despite the ongoing conflict in the Middle East.

While the war between the United States and Israel against Iran has driven up oil and gas prices, contributing to inflationary pressures, the OECD stated that these negative effects have been mitigated by several key factors. According to the report, substantial oil inventories, alternative supply sources outside the Gulf region, and discretionary government support measures have helped cushion the global economy from the full impact of the conflict.

Artificial intelligence investment was highlighted as a significant driver of this growth. The OECD suggested that AI-related expenditures could lead to “stronger growth than projected,” although the organization cautioned that economic expansion could stall if these investments fail to deliver expected returns.

The outlook for 2027, however, presents a more cautious picture. The OECD lowered its 2027 growth forecast by 0.1 percentage points to 3%. Global growth has also decelerated compared to last year’s rate of 3.4%. In response to rising energy costs, governments worldwide have begun increasing interest rates to combat inflation.

The organization warned that the economic trajectory remains heavily dependent on the resolution of the Middle East crisis. Continued fighting is likely to exacerbate inflation, while rising government bond yields underscore the urgent need for nations to improve public-sector efficiency, strengthen revenues, and manage debt sustainability to maintain fiscal flexibility during shocks.

Additional risks to the global economy include weather-related disruptions, such as the El Nino climate pattern, which the OECD identified as a potential cause of supply chain bottlenecks and elevated food prices.