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The global economy has weathered the energy supply shock triggered by the conflict in the Middle East better than expected, but continued inflationary pressures and uncertainty are weighing on the near-term outlook, according to the OECD’s latest Interim Economic Outlook.
The impact of the oil shock has been cushioned by greater use of alternative supply routes, inventory drawdowns – including the co-ordinated release of strategic reserves in OECD economies –, additional production outside the Gulf, and lower oil demand, particularly from China. Strong investment in artificial intelligence continues to support trade and economic growth.
The Outlook projects global growth of 2.9% in 2026 and 3.0% in 2027. The evolution of the conflict in the Middle East remains highly uncertain, and will continue to pose considerable risks to the baseline projections.
GDP growth in the United States is projected at 2.2% in 2026 before moderating to 2.1% in 2027. In the euro area, growth is projected to be 1% in both 2026 and 2027. China’s growth is projected to be 4.5% in 2026 and 4.2% in 2027.
Inflation pressures will persist, with G20 inflation now expected to be higher in 2026 and 2027 than previously projected, reflecting the surge in global energy prices. Inflation in the G20 economies is projected to be 4.1% in 2026, easing to 3.6% in 2027.
“Global growth has held up better than expected, but the buffers that absorbed the energy shock are being depleted. Growth is weaker than last year and inflation is rising again,” OECD Secretary-General Mathias Cormann said. “Governments need to target support where it is most needed and get public spending on a sustainable track. They also need to build long term growth foundations, with stronger skills, more diversified energy supplies and faster AI adoption.”
Risks remain tilted to the downside. Rising long-term sovereign bond yields are increasing fiscal pressures on governments. Rapid AI investment is boosting growth but it is increasingly relying on external financing, which could amplify a market correction if expected returns do not materialise. Weather-related developments could add to existing commodity-price pressures and push food prices higher.
Given these challenges, the Outlook highlights key priorities for policymakers. Central banks should remain vigilant and ensure inflation expectations are well-anchored. Stronger efforts are needed to ensure the sustainability of public finances. Measures to cushion the economic impact of the energy shock will need to be targeted and temporary so as to maintain incentives for energy savings.
For the full report and more information, consult the Interim Economic Outlook online. Media queries should be directed to the OECD Media Office (+33 1 45 24 97 00).
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