Nuran Erkul Kaya
03 June 2026•Update: 03 June 2026
- Prolonged disruption scenario projects 2.1% growth in 2026, according to report
The Organization for Economic Cooperation and Development (OECD) expects global economic growth to slow to 2.8% in 2026 due to the impact of the Middle East war, according to a report on Wednesday.
The organization’s Economic Outlook report for this year, subtitled Under Pressure, says uncertainties over the war’s duration and scale persist as the US-Israel-Iran conflict continues to test the resilience of the global economy.
The report states that the reconstruction of damaged infrastructure and transport routes, as well as the restoration of global supply chains to normal levels, could take months and lead to more economic pressure for some time to come, even after the war ends.
The rise in oil, liquefied natural gas (LNG), and agricultural and industrial input prices adds pressure on inflation across countries, while many Asian economies are among the most directly exposed to current and potential shocks due to their reliance on Middle Eastern imports.
The OECD presented two different scenarios regarding how the developments in the global economy may unfold over the next 18 months, depending on the course of the energy crisis and the time it will take to reach a lasting, tangible solution to the conflict, as well as the resulting policies.
“In a time-limited disruption scenario, the sizeable disruptions are assumed to remain relatively short-lived, while in a prolonged disruption scenario, broader disruptions last well into 2027, much longer-lasting negative consequences,” the report said. “Both scenarios occur against a background of an otherwise solid underlying momentum in the global economy, with output boosted by strong AI-related investment, production and trade, lower tariff barriers and supportive financial and fiscal conditions.”
The time-limited disruption scenario is expected to slow down global economic growth to 2.8% from 3.4% in 2025. The OECD had estimated global economic growth would reach 2.9% and 3% in 2028 in its March report.
The organization expects policy rates will remain stable in most major economies this year with underlying price pressures also remaining limited, only to ease by 2027. G20 countries are expected to see their inflation rise from 3.4% to 4% this year and slow to 3.1% by 2027.
Global economic growth may be slightly higher if a lasting ceasefire is reached and energy prices decline further, with expectations of an additional 10% drop in oil, gas, and fertilizer prices starting in the second half of the year boosting global economic growth by an additional 0.1 percentage points in 2027 while reducing inflation by 0.3 percentage points.
The prolonged disruption scenario, on the other hand, assumes that current energy production disruptions and exports in the Gulf will persist through the second half of next year and gradually ease if peace is not achieved.
This scenario expects severe shortages in energy, agricultural, and industrial goods by Gulf countries, with a potential to have lasting effects on output due to reduced productivity and falling investments.
Global economic growth in this scenario is expected to fall to 2.1% this year and 1.8% in 2027, with the slowdown potentially pushing many economies into recession and boosting unemployment. Global inflation is expected to rise 0.4 percentage points this year and 1.3 percentage points by 2027, while policy rates are expected to hike 50–75 basis points in many countries.
As for Türkiye, the economy is expected to grow 3.1% in 2026 and 3.8% in 2027.
