OECD raises 2026 global growth forecast to 2.9% while warning energy costs threaten 2027

Artificial intelligence cushions global slowdown

The Organisation for Economic Co-operation and Development raised its 2026 global growth projection to 2.9% in its interim economic outlook presented in Paris on Wednesday, up from the 2.8% estimated in June. Momentum remains lower than the 3.4% recorded in 2025 as sustained commodity price pressures from the Middle East conflict continue to filter through supply chains. Strong spending on artificial intelligence infrastructure, including data centres and semiconductors, served as a primary buffer for activity during the first half of the year. This capital expenditure lifted technology exports from Japan and Korea while supporting domestic business spending in the United States. Global growth for 2027 was trimmed to 3.0%, down from the 3.1% projected in June.

Regional growth projections and trade dynamics

The updated outlook outlines divergent trajectories across the largest economies as domestic demand and industrial policies adjust to energy costs. The United States economy is projected to expand by 2.2% in 2026 and 2.1% in 2027, both upgraded from June estimates as business investment offsets cooling consumer demand. China is forecast to grow 4.5% in 2026 and 4.2% in 2027, matching June projections, with Beijing's restrictions on surplus industrial capacity restraining corporate spending. In the euro area, gross domestic product is expected to expand by 1.0% in both 2026 and 2027, supported late in the cycle by planned defence spending. Within the bloc, Italy is projected to grow 0.9% this year before slowing to 0.6% in 2027.

Inflation risks and monetary policy paths

Headline inflation across the G20 is forecast to reach 4.1% in 2026 before easing to 3.6% in 2027, reflecting revisions of 0.1 and 0.5 percentage points upward compared to June. United States consumer price inflation is projected at 3.6% in 2026 and 2.6% in 2027, with import tariffs and elevated fuel prices restraining household purchasing power. In the United Kingdom, where economic growth was revised up to 1.1% for 2026 and down to 1.0% for 2027, annual inflation is expected to reach 3.1% this year and 2.6% in 2027. The OECD indicated that the Bank of England could maintain its benchmark interest rate at 3.75% rather than joining other central banks in further tightening.

The UK is starting from a different position on monetary policy compared with other countries.

Downside scenarios and commodity shocks

The report stressed that overall economic resilience remains conditional on whether regional stability returns to global energy routes. The initial economic shock following the outbreak of hostilities in late February was partly mitigated by the release of government petroleum reserves, reduced Chinese fuel imports, and fuel substitutions including coal. Oil prices dropped below $100 per barrel on Tuesday, yet recurring disruptions since the collapse of the ceasefire in July sustain cost pressures for households.

Global economic prospects remain heavily dependent on whether a durable resolution to the Middle East conflict is achieved.

The organization outlined a downside scenario combining persistent energy disruptions, government bond yield increases, weaker AI investment returns, and agricultural shocks from a strong El Niño pattern. If realized simultaneously, these combined risks could reduce global economic growth by 0.7 percentage points and add 1.1 percentage points to global inflation next year.