The conflict in the Middle East, which is significantly disrupting the world’s supply of energy and other critical commodities like fertilizer, will slow economic growth this year and raise inflation through 2027, the Organization for Economic Cooperation and Development said on Wednesday.
The global economy’s growth will slow to 2.8 percent this year from 3.4 percent in 2025, before recovering to 3.1 percent next year, the organization said. Those projections assume energy prices have or will have peaked and then will gradually fall as energy production in the Persian Gulf recovers and air and shipping routes then become fully operational. The war has led to the closing of the Strait of Hormuz, the critical waterway off Iran’s southern coast.
Inflation in the Group of 20 economies, which includes the United States, China and the European Union, would average 4 percent this year and 3.1 percent next year. That’s higher than the organization’s previous forecast for 2027 about two months ago.
“The evolution of the Middle East conflict remains uncertain, but its economic consequences are likely to be felt for some time even after its resolution,” the group said in a report released on Wednesday. The O.E.C.D., based in Paris, is a group of mostly advanced economies, although its projections include countries that aren’t members.
The global economy entered 2026 stronger than expected and was on track to grow more, the organization said. Instead, the war on Iran has led economists to lower their outlooks and issue warnings about the potential for further disruption.
“The big issue of uncertainty is related not only to the depth of the energy crisis,” said Stefano Scarpetta, the chief economist of the O.E.C.D. Other unknown factors, he said, are the supplies of goods like fertilizer, crucial to global agriculture, and helium, which is crucial to making semiconductors.
The extent of damage to energy infrastructure in the region is also uncertain, he added.
Already, the store of oil has dropped significantly, by more than 100 million barrels in both April and May. That’s causing problems, particularly for Asian countries that depend heavily on imports from the Middle East, such as India, the Philippines and Vietnam. Some countries have minimal crude oil stocks for their refineries to produce more petroleum products.
Even in the organization’s more optimistic scenario, it said that “there may be some limited energy shortages in some economies, especially in Asia.”
Still, “booming” artificial intelligence investment and emergency government spending will help support growth in the short term, the organization said. Households can use savings as a buffer to keep spending.
In the United States, growth would slow modestly to 2 percent this year and 1.8 percent next year, from 2.1 percent in 2025. The growth rate for the group of countries that use the euro would fall by almost half to 0.8 percent this year before recovering to 1.2 percent next year.
But the O.E.C.D. also laid out the consequences of a more pessimistic scenario, in which energy prices stay high well into next year and shortages of fuel, fertilizers and goods for industrial uses worsen.
Compared with the less gloomy scenario, global inflation would be more than one percentage point higher next year. Unemployment would rise, and investment, including in A.I., which is energy intensive, would weaken “significantly,” the organization said. Global economic growth would plummet to 2.1 percent this year and slow further to 1.8 percent next year. Some countries would be pushed into recession.
“That is half of the average growth rate in the global economy in the past 25 years,” Mr. Scarpetta said. “This, of course, will mean that households and firms will face a very dire situation.”
Eshe Nelson is a Times reporter based in London, covering economics and business news.
The post Even if Oil Prices Peak Soon, the Global Economy Will Slow This Year appeared first on New York Times.
