OECD Warns of Middle East War Economic Impact

The OECD (OECD) has issued a stark warning that a prolonged war in the Middle East could push some economies into recession and lead to sharply higher inflation. In a baseline scenario, global growth is projected to slow from 3.4% in 2025 to 2.8% in 2026. However, if energy disruption persists, global growth could sharply slow to 2.1% in 2026 and 1.8% in 2027, rates comparable to major crises. Asian countries, particularly Japan, are expected to be hit hardest due to their reliance on Middle East energy supplies. The International Energy Agency, International Monetary Fund, World Bank Group, and World Trade Organization have also expressed concerns about the war's impact on global energy supplies, especially through the Strait of Hormuz. Higher energy prices could add significantly to global inflation, potentially prompting central banks to raise interest rates.