OECD raises 2026 global growth forecast to 2.9%

The Organisation for Economic Co-operation and Development on Wednesday upgraded its projection for global economic growth this year to 2.9%, a 0.1 percentage point increase from its June estimate, citing resilient economies and favorable financial conditions even as the Middle East conflict and elevated energy prices continue to weigh on the outlook.oecd+1

The Paris-based organization released its Interim Economic Outlook on September 23, noting that rising equity markets, continued access to credit, and large-scale investment in artificial intelligence have helped support economic activity across many countries. The OECD said that substantial oil inventories, additional supply from outside the Gulf economies, and government support measures have cushioned the blow from high energy prices following the U.S. and Israeli strikes against Iran earlier this year.ua+1

Growth Slows From 2025

Despite the modest upgrade, global growth has slowed from the 3.4% recorded last year, and the OECD trimmed its 2027 forecast by 0.1 percentage point to 3%. The organization raised its U.S. GDP growth projection by 0.2 percentage points to 2.2%, while the eurozone forecast was lifted to 1% and Japan's to 0.8%, both also up 0.2 points. China's growth forecast was held steady at 4.5%.dailysabah+1

Rising Yields and Inflation Risks

Governments have begun raising interest rates to contain inflation driven by soaring oil and gas prices, pushing government bond yields to levels not seen since the 2007-2008 financial crisis. The OECD warned that these rising borrowing costs compound the challenges facing countries already dealing with high debt and deficits.dailysabah

"Rising bond yields underline more than ever the need for enhanced efforts to contain and reallocate government spending, improve public-sector efficiency and strengthen revenues to ensure longer-term debt sustainability," the organization said.dailysabah

The OECD cautioned that a prolonged Middle East war could extend inflationary pressures, with G-20 price growth projected at 4.1% this year. It also flagged potential weather-related supply shocks, including a strong El Niño, as risks to agricultural production and food prices.ua+1