The Organisation for Economic Co-operation and Development (OECD) has nudged up its global growth projection for 2026, attributing the upgrade to a surge in artificial intelligence-related investment that is helping to offset the economic drag from elevated energy prices.
In its latest interim outlook, the Paris-based institution now sees worldwide gross domestic product expanding by 2.9% in 2026, a slight improvement from the 2.8% forecast issued in June. However, the projection for 2027 was trimmed to 3.0% from 3.1% previously, reflecting a more cautious view on medium-term momentum.
Inflation pressures intensify
The OECD also revised its inflation forecasts upward. Inflation across the G20 economies is now expected to reach 4.1% this year, up from the 4.0% estimate in June, before easing to 3.6% in 2027—a notable jump from the 3.1% projected just three months ago. Core inflation, which excludes volatile food and energy prices, is seen at 2.7% in 2026 and 2.5% in 2027.
AI investment cushions the blow, for now
The organisation said continued strength in AI-related investment has helped sustain global production, trade and growth even as energy markets remain strained. It expects an assumed decline in energy prices in 2027, as supply recovers, to help stabilise growth further out.
But the OECD flagged real risks to that outlook. "Growth prospects could also weaken if long-term sovereign bond yields rise further or if returns on AI-related investment fall short of expectations, potentially triggering a repricing of financial assets," the organisation said in its report. Persistently high energy prices, weaker real income growth and higher interest rates were also cited as factors that could temper growth in several economies.
Country-level picture is uneven
The US economy is now expected to grow 2.2% in 2026, an upgrade from June, before easing to 2.1% in 2027, with heavy AI-related investment offsetting weaker consumer spending. US inflation is projected at 3.6% in 2026, easing to 2.6% in 2027.
China's growth is seen holding at 4.5% this year before slowing to 4.2% in 2027. Canada's outlook worsened, with 2026 growth cut to 0.9% from 1.2%, and 2027 lowered to 1.3% from 1.7%, reflecting new US tariffs on Canadian exports.
Oil slides as diplomacy gains momentum
The energy backdrop shaping the OECD's forecast shifted further on Wednesday. Crude oil traded near $91 a barrel, extending losses into a fifth straight session, after President Trump said US officials had "a very good meeting" with Iranian envoys and that there was "a lot of momentum" toward a deal.
Addressing the UN General Assembly, Trump said he faced a "big decision" on whether to pursue a negotiated settlement with Iran or take more forceful action, adding he believed a deal would likely follow the US midterm elections. A senior Iranian official said Tehran's proposal, including a resumption of talks to permanently end hostilities, has been formally conveyed to Washington.
Japan's Kyodo News had earlier reported that Iran offered to reopen the Strait of Hormuz within seven days if the US lifted its blockade on Iranian ports. Separately, Saudi Arabia has begun preparations to restart its East-West pipeline, halted after drone attacks earlier this month, with exports potentially resuming later this week.
This article is for informational purposes only and does not constitute financial advice.
