OECD Warns of Global Economic Slowdown Due to Iran Conflict

The OECD has revised its global growth forecast, predicting a decline from 3.4% in 2025 to 2.1% in 2026 if the Iran conflict persists into 2027. The report highlights that energy shortages and rising prices could push some economies into recession, particularly affecting developing nations with limited energy reserves. The ongoing disruptions in the Strait of Hormuz are driving up costs for essential industrial inputs, including fertilizers. The OECD outlines two scenarios: a prolonged disruption leading to severe economic consequences, and a more optimistic scenario if a peace agreement is reached soon. The chief economist, Stefano Scarpetta, emphasizes that the longer the conflict continues, the greater the economic and social costs will be. Inflation is expected to rise significantly, impacting investment and employment across various sectors, including energy-intensive industries like AI. The OECD's analysis underscores the urgent need for a resolution to stabilize the global economy.

Key Points: • OECD forecasts global growth to drop to 2.1% in 2026 if Iran conflict continues. • Energy shortages and rising prices could push some economies into recession. • Developing nations are particularly vulnerable due to limited energy reserves.