OECD Warns U.S.-Iran War Threatens Global Growth

• In a prolonged-disruption scenario extending into 2027, global growth could fall to just 2.1% in 2026 and 1.8% in 2027, potentially pushing some economies into or near recession
• The worse-case scenario projects global inflation rising by 0.4 percentage points in 2026 and 1.3 percentage points in 2027, with unemployment increasing and investment weakening
• Developing economies with limited energy reserves and higher debt would be especially vulnerable, while the disruptions threaten energy-intensive sectors including AI data centers

Summary: OECD Warns U.S.-Iran War Threatens Global Growth

The Organisation for Economic Cooperation and Development (OECD) has significantly reduced its global growth forecast, citing disruptions from the U.S.-Iran conflict as a major threat to economic stability.

Key Projections

Base Scenario (time-limited disruption):

• Global growth: 3.4% (2025) → 2.8% (2026) → 3.1% (2027)

Worst-Case Scenario (prolonged disruption into 2027):

• Global growth: 2.1% (2026) and 1.8% (2027)
• Global inflation increase: +0.4 percentage points (2026), +1.3 percentage points (2027)
• Some economies would tip into or near recession

Primary Concerns

The conflict has disrupted shipping through the Strait of Hormuz and damaged energy infrastructure throughout the Gulf, causing energy prices to surge. This has elevated costs for oil, natural gas, and key industrial inputs.

OECD Chief Economist Stefano Scarpetta emphasized impacts vary by country. While Japan and South Korea can rely on large reserves, nations like India are already rationing gas. Developing economies with limited energy reserves and higher dependency face especially severe consequences.

Market Implications

Prolonged disruptions would:

• Increase unemployment
• Weaken investment, including energy-intensive AI sectors
• Risk financial market repricing
• Complicate central bank policy amid simultaneous weak growth and inflation

Brent crude traded at $98.15, up 2.24%.

The report identified AI investment from Magnificent Seven stocks as the sole upside, potentially adding 0.4% to G20 GDP per capita growth (0.9% in the U.S.), though this depends on conflict resolution and energy price stabilization. The OECD stressed urgent need for supply chain resilience and energy diversification.