OECD lifts global growth forecast for 2026 despite Middle East war

The OECD group of industrialized countries on Wednesday lifted its global growth forecast for 2026 despite the war in the Middle East.

It put the figure at 2.9%, an increase of 0.1 percentage points over June's estimates.

The 38-member Organization for Economic Cooperation and Development (OECD) is a Paris-based forum for industrialized nations.

What did the OECD say about 2026 growth?

The OECD said growth remained "resilient" in 2026, and that "broader financial conditions remain supportive."

It added that the impact of the Middle East war was being softened by other factors.

"Sizeable oil inventories, additional supply from outside the Gulf economies and discretionary government support measures all helped to cushion the impact on the global economy," the group said.

It said investments in artificial intelligence could result in "stronger growth than projected," but warned that growth could still slow if investments do not pay off as expected.

Growth still threatened

However, global growth has dropped from last year's 3.4%, and the OECD has also dropped its 2027 forecast by 0.1 percentage points to 3%.

Governments around the world have begun raising interest rates to cushion inflationary pressures sparked by rising oil and gas prices.

The OECD stressed that the outlook depends on whether a lasting resolution to the conflict is found, as continued fighting would likely lead to higher inflation.

The crisis has also led to an increase in government bond yields.

"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 and maintain the ability of governments to react to significant shocks," the OECD said.

It said that other threats include weather-related risks like the El Nino pattern, which could cause supply bottlenecks and high food costs.