OECD Cuts Global Growth Outlook Amid Iran Conflict Risks

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June 3, 2026 — The OECD has revised its global economic outlook downward, warning that continued geopolitical tensions—particularly related to the conflict involving Iran—are weighing on global growth and increasing uncertainty for the world economy.

The organization emphasized that while the global economy has remained relatively resilient, rising energy costs and supply disruptions linked to geopolitical instability are weakening momentum.

Iran Conflict Raises Downside Risks

According to the OECD, the duration and intensity of the Middle East conflict remain a key factor shaping global economic performance.

A prolonged disruption could significantly deepen economic damage through:

· Higher energy prices

· Supply chain disruptions

· Increased inflationary pressure

· Reduced global trade flows

The OECD warned that the longer the conflict persists, the greater the risk of sustained global economic slowdown.

Baseline Growth Forecast Lowered

In its updated outlook, the OECD projects global growth to slow from 3.4% in 2025 to 2.8% in 2026, before recovering slightly to 3.1% in 2027 under its baseline scenario.

However, the organization stressed that this projection depends heavily on geopolitical stability and energy market conditions.

Downside Scenario: Deeper Economic Damage

Under a prolonged disruption scenario, the OECD warns that global growth could fall significantly lower than baseline projections, with sharper inflationary pressures and increased risk of recession in some economies.

Emerging markets are expected to be among the most vulnerable due to their reliance on energy imports and weaker economic buffers.

Inflation and Policy Challenges

The OECD also highlighted that rising energy prices may keep inflation elevated for longer, potentially forcing central banks to maintain tighter monetary policy.

This could further slow investment and consumer spending, adding pressure to already fragile growth conditions.

Key Takeaway

The OECD outlook underscores a fragile global recovery, where economic performance increasingly depends on geopolitical developments, especially in the Middle East. Persistent conflict risks could significantly worsen growth and inflation dynamics worldwide.