The global economic outlook remains resilient but has weakened due to rising energy prices and geopolitical tensions, according to the March interim economic outlook report of the Organization of Economic Co-operation and Development (OECD).
Global GDP growth is projected to remain broadly stable at 2.9 percent in 2026, reflecting the impact of recent energy market disruptions and heightened uncertainty, before edging up to three percent in 2027, sustained by robust technology-related investment and gradually lower effective tariff rates.
The report highlights that escalating geopolitical tensions, particularly in the Middle East, have led to higher energy prices, which are weighing on economic activity. The OECD noted that the recent shock has effectively erased a potential upward revision to global growth, underscoring the fragility of the recovery.
Higher energy prices and supply-chain disruptions come at a time when inflation remains above target in a few major economies, including Brazil, Mexico, Turkey, the UK and the US. Medium-term inflation expectations have also risen following the energy price spike. The OECD projects G20 inflation to reach around four percent in 2026, driven mainly by higher energy costs, before easing to 2.7 percent in 2027.
Diverging growth outlook across regions
The economic outlook varies across major economies:
- US: annual GDP growth is projected to moderate from two percent in 2026 to 1.7 percent in 2027, as strong AI-related investment is gradually offset by a slowdown in real income growth and consumer spending.
- Euro area: GDP growth is anticipated to ease to 0.8 percent in 2026, as higher energy prices weigh on activity, before increasing to 1.2 percent in 2027 helped by stronger defense spending.
- China: growth is projected to ease to 4.4 percent in 2026 and 4.3 percent in 2027.
- Japan: growth expected at around 0.9 percent both in 2026 and 2027.
The OECD report stated that agreements to ease trade tensions and deepen trade relations would improve policy certainty and strengthen the prospects for sustainable growth. New export restrictions in response to supply disruptions should be avoided, as these could exacerbate supply shortages and push up prices.