OECD raises 2026 global growth forecast as economy weathers successive shocks

Wednesday 23 September 2026 - 23:00

By: Azzat Manal

OECD raises 2026 global growth forecast as economy weathers successive shocks

The global economy has shown greater resilience than expected in the face of geopolitical tensions, energy disruptions and renewed inflationary pressures, prompting the Organisation for Economic Co-operation and Development (OECD) to slightly upgrade its growth forecast for 2026.

In its September 2026 Interim Economic Outlook, the OECD projects global gross domestic product to expand by 2.9% this year, up from its previous estimate of 2.8%. However, the organisation lowered its forecast for 2027 to 3%, compared with 3.1% previously, reflecting the continued effects of the energy shock and weaker momentum in some economies.

The OECD said the economic impact of the conflict in the Middle East has so far been contained better than anticipated. Alternative energy supply routes, the use of existing oil inventories, additional production outside the Gulf and lower oil demand have helped limit the immediate damage to global activity. Government support measures have also provided a cushion for households and businesses.

Artificial intelligence investment has emerged as another important source of economic momentum. Continued spending on data centres, semiconductors and computing infrastructure is supporting production and international trade, although the OECD cautioned that expectations surrounding future AI-related earnings could create financial risks if investment returns fall short.

Despite the improved 2026 outlook, the global economy remains weaker than in 2025, when growth reached 3.4%. Higher energy costs, weaker real income growth and elevated interest rates are expected to weigh on economic activity, while renewed inflation could make the adjustment more difficult for central banks and governments.

Inflation is expected to remain elevated for longer. The OECD projects headline inflation across the G20 economies at 4.1% in 2026, before easing to 3.6% in 2027. The organisation said the energy shock is likely to keep price pressures above earlier expectations, particularly if disruptions to energy supplies persist.

Financial conditions also present a growing challenge. Long-term government bond yields have remained high, increasing borrowing costs for states already facing elevated debt and budget pressures. The OECD has called for stronger efforts to improve public-sector efficiency, manage government spending and strengthen public revenues in order to preserve fiscal room for future shocks.

The outlook also remains exposed to further energy disruptions, food-price pressures and weather-related shocks. The OECD specifically highlighted the possibility of a very strong El Niño event affecting agricultural production and adding to inflationary pressure on food prices.

Among major economies, US GDP is projected to grow by 2.2% in 2026, while the euro area is expected to expand by 1%. China’s economy is forecast to grow by 4.5% this year. The OECD expects global growth to strengthen only modestly in 2027 as energy pressures ease, while warning that the path remains highly dependent on geopolitical developments and the evolution of inflation.