OECD Slashes Global Growth Forecast as U.S.-Iran War Rattles Energy Markets
CNBC reported Wednesday that the OECD has sharply reduced its global growth outlook, citing the economic fallout from the ongoing U.S.-Iran war as a serious and potentially lasting threat.
OECD Global Growth Forecast Downgraded for 2026
The Paris-based organisation’s June Economic Outlook now puts world growth at 2.8% for 2026, down from 3.4% recorded in 2025. A partial recovery to 3.1% is possible in 2027, but only if energy market disruptions ease by mid-year.
That relatively optimistic path depends on a swift peace agreement and a rapid reopening of the Strait of Hormuz. OECD chief economist Stefano Scarpetta warned that a prolonged disruption could cut global expansion to just 2.1% in 2026 and 1.8% in 2027. Either figure would push several economies to the brink of recession.
How the Hormuz Shutdown Is Hitting the World Economy
The closure of the Hormuz strait, compounded by damage to Gulf energy infrastructure, has sent oil prices sharply higher. That shock is feeding through into fertiliser costs and other industrial inputs, broadening the economic pain well beyond the energy sector.
In the worst-case scenario, the OECD projects global inflation climbing 0.4 percentage points above baseline in 2026 and a further 1.3 percentage points in 2027. Scarpetta noted that weaker investment and rising unemployment would follow, with energy-intensive sectors such as AI infrastructure among those most exposed.
The report flagged that developing economies face the gravest risks. Nations with thin fiscal buffers, fragile currencies and households that spend large shares of income on food and energy have little capacity to absorb such a shock.
Background: A Single Chokepoint Exposes Global Fragility
The Strait of Hormuz has long been identified as the world’s most critical energy artery. Roughly 20% of global oil supply transits the waterway. Previous tensions in the Gulf have caused brief price spikes, but a sustained closure of this scale is without modern precedent.
The OECD has previously called for supply-chain diversification and reduced fossil-fuel dependency. Wednesday’s report gave those arguments renewed urgency, urging emergency demand-restraint measures and international coordination of strategic energy reserves as near-term cushions.
Central Banks Face a Harder Road
The combination of slower growth and sticky inflation creates a difficult environment for monetary policymakers. Central banks already navigating a narrow path between fighting price pressures and protecting growth now face an additional external shock outside their control.
Scarpetta said a durable peace settlement would not only bring regional relief but also help restore the conditions needed for a sustained global recovery. “The longer the disruptions last, the larger the economic and social costs become,” he told CNBC.
