Geopolitical risks shake global economy

The resilience of the global economy is being tested by the evolving conflict in the Middle East, which has generated new inflationary pressures while creating significant uncertainty, according to the OECD’s latest Interim Economic Outlook. Working with over 100 countries, the OECD is a global policy forum.

“Global growth was steady heading into 2026, supported by the strength of technology-related production, lower effective tariffs on U.S. imports and the momentum carried over from 2025. The energy supply shock following the onset of the conflict in the Middle East is expected to significantly weigh on global growth, while putting new upward pressure on inflation,” said the OECD on 26 March 2026.

As a result, the OECD Outlook projects global growth of 2.9% in 2026 and 3.0% in 2027. The evolution of the conflict in the Middle East is highly uncertain and poses considerable risks to these baseline projections. A more long-lasting disruption, with energy prices remaining elevated beyond mid-2026, would further reduce growth prospects.

“GDP growth in the United States is projected at 2.0% in 2026, before moderating to 1.7% in 2027. In the euro area, growth is projected to be 0.8% in 2026 and 1.2% in 2027. China’s growth is projected to slow to 4.4% in 2026 and 4.3% in 2027,” said the OECD.

“Inflation pressures will persist for a longer period, with inflation now expected to be higher in 2026 than previously projected, reflecting the surge in global energy prices. Headline inflation in G20 countries is projected to be 4.0% in 2026, easing to 2.7% in 2027,” it continued.

To read the rest of this news report in the April 2026 issue of ISMR, see https://joom.ag/oVvd/p6