OCDE forecasts 2.9% global growth for 2026 as artificial intelligence offsets Middle East conflict pressures
The world economy will grow 2.9% this year and 3.0% in 2027, the Organisation for Economic Co-operation and Development (OCDE) said in its interim report released today. The projection for 2026 was revised up by 0.1 percentage points from the June forecast, while the outlook for next year was trimmed by the same margin.
Stronger inflationary pressures, weaker real income growth and higher interest rates will slow the pace of growth in the short term across many economies, the OCDE said. Robust artificial intelligence activity and an expected decline in energy prices, in line with futures markets for next year, will help strengthen activity throughout 2027.
Global growth slowed in the first half of the year but remained resilient in many countries, despite the adverse effects of the conflict in the Middle East. High oil reserves, additional supply from outside Gulf economies and discretionary government support measures cushioned the impact on the global economy.
The Paris-based organisation cautioned that global economic prospects remain heavily dependent on achieving a lasting solution to the Middle East conflict. Energy prices have risen again recently, and elevated refining margins are putting additional pressure on consumer prices and company costs.
Artificial intelligence drives investment and trade
Activity linked to AI has been robust and sustained, boosting investment, production and trade, particularly in the United States. The OCDE notes that AI-related spending is helping to offset weaker investment in other corporate sectors. Technology exports from Japan and South Korea have also benefited from this trend.
The organisation suggests that greater expansion of AI investments and technology production could provide an additional short-term boost to growth. When integrated effectively into production processes, AI technologies can deliver substantial productivity gains.
The OCDE flagged several risks, however. Returns on AI investments could disappoint or take longer to materialise, especially if bottlenecks emerge in inputs such as electricity or advanced semiconductors. The high energy dependency of AI makes the sector vulnerable to future energy shortages. A significant slowdown in AI sector investment could negatively impact financial markets.
Euro zone stuck at 1% growth
For the euro zone, the OCDE estimates that growth will remain moderate, at 1% in both 2026 and 2027. Rising energy prices and higher interest rates are pressuring economic activity — costs that residents across Portugal and the bloc will feel in household budgets and borrowing.
The estimate for 2026 was revised up by 0.2 percentage points from June forecasts, but the projection for 2027 was revised down by 0.2 points. The organisation expects these impacts to diminish as energy prices retreat and new defence spending initiatives gain momentum.
Among countries covered in the interim report, Germany, Italy and Spain saw their estimates for this year revised upward to 1.1%, 0.9% and 2.6%, respectively. For France, the OCDE lowered projections by 0.3 percentage points to 0.4% in 2026 and by 0.1 points to 0.7% in 2027.
Inflation in the euro zone is expected to remain elevated in the short term, partly due to the recent sharp increase in gas prices, before retreating slightly from 3% in 2026 to 2.9% in 2027.
Brazil emerges as exception among G20 peers
For Brazil, the OCDE raised its GDP growth projection to 2% in 2026 but reduced the forecast for 2027 from 2.1% to 1.9%. The Brazilian government's economic team had already announced a downward revision of GDP growth on Tuesday, from 2.3% to 2%, driven by a decline in the services sector.
The report cites Brazil among the G20 emerging economies that sustained growth despite the effects of the Middle East war and high energy prices. Growth in India, Indonesia and Brazil was supported by resilient domestic demand and government policies that protected families and businesses from the impact of rising energy costs.
The OCDE highlighted the Brazilian Central Bank as one of the few exceptions among G20 monetary institutions. Since March, Brazil has reduced its benchmark interest rate by one percentage point to 13.75%. Even so, the organisation assesses that official rates remain at a "fairly restrictive level."
Inflation to accelerate before 2027 slowdown
The OCDE estimates that inflation will accelerate in the short term, reflecting rising commodity prices, before gradually decelerating in 2027. Moderating energy prices and tighter monetary policy will help contain broader price pressures.
Overall inflation in the G20 is expected to rise to 4.1% in 2026, before falling to 3.6% in 2027. The organisation noted that other risks include climate-related supply shocks, rising long-term interest rates and AI investment returns that fall short of expectations.
