Middle East Conflict Threatens Global Growth: OECD Warns of Economic Downturn

The OECD warns that the Middle East conflict could derail global economic growth, with energy price spikes raising inflation risks. While global GDP growth was initially set for improvement, it is now projected to decline. Energy market disruptions and tariff changes present further risks to growth and inflation.

The ongoing conflict in the Middle East is threatening global economic stability, with the OECD warning of a potential downturn. The disruption of energy shipments through the Strait of Hormuz could lead to heightened inflation, derailing prior growth predictions.

Initially anticipating stronger global growth, the OECD now projects a slowdown from 3.3% in 2022 to 2.9% in 2026. Energy price hikes and the uncertain conflict exacerbate challenges, despite benefits from technology investments and reduced tariffs.

Amid rising energy costs, G20 inflation could exceed previous forecasts. The U.S. faces lower GDP growth due to tariff changes and mixed investment effects, while similar trends affect China, the Euro area, and Japan. The OECD advises central banks and governments to remain proactive amidst these uncertainties.

(With inputs from agencies.)