2 hrs ago
OECD Says Global Economy Resilient Despite Mounting Threats
The OECD says the world economy is doing better than expected.
This is happening even though energy prices are high.
However, a long conflict in the Middle East could create bigger problems.
Higher oil and food prices could make it harder for people and businesses to spend money.
Falling stock prices and higher borrowing costs could also slow the economy.
The OECD says global growth could drop to 2.3% next year in a bad scenario.
Central banks may raise interest rates a little to keep inflation from spreading.
Governments are also being warned to make careful decisions about their debts.
The OECD raised its global growth outlook, saying activity is stronger than expected despite high energy prices.
A prolonged Middle East conflict could combine with food inflation, falling equity prices and higher bond yields to weaken growth.
The OECD projects global growth could slow to 2.3% next year under those adverse conditions.
It expects inflation to remain higher in 2027 and central banks to raise interest rates modestly.
The OECD raised India’s 2026 growth forecast to 7.1% and lowered France’s 2025 forecast to 0.4%.
- Who
- The Organization for Economic Cooperation and Development, or OECD, issued the outlook; central banks and governments are also affected.
- What
- The OECD said global economic growth is stronger than expected but warned that energy prices, the Middle East conflict, inflation and financial-market pressures pose risks.
- Where
- The outlook concerns the global economy and was issued by the Paris-based OECD.
- When
- The quarterly outlook was released Wednesday, with forecasts covering 2026 and 2027.
- Why
- The OECD issued the warning because a prolonged Middle East conflict could keep oil and food prices high while increasing bond yields and reducing equity prices.
Key facts
- Global growth risk
- Growth could be as low as 2.3% next year if several economic and financial threats combine.
- India forecast
- The OECD raised its 2026 growth forecast for India to 7.1% from 6.3%.
- China forecast
- China’s 2026 growth forecast remained 4.5%, with a slightly sharper slowdown expected in 2027.
- France forecast
- France is expected to grow 0.4% this year, making it the weakest-growing G7 advanced economy in the forecast.
- Germany forecast
- Germany’s growth forecast for this year was raised to 1.1%, from 0.7% in June.
- United States inflation
- U.S. inflation excluding food and energy is expected to average 2.5% next year, down from 3.3% this year.
- Interest rates
- The OECD expects modest additional rate increases because it sees limited evidence of broader price or wage effects from higher energy costs.
Quotes
Scarpetta
OECD official commenting on central-bank responses to energy-driven inflation
“There is a signal being sent about the sustainability of the public finances. Governments are facing difficult choices.”
livemint.com
“There has been a reaction in anticipation of second-round effects.”
livemint.com
Sources
Related news
Moody’s Raises India FY27 Growth Forecast to 7% Amid Risks
Moody’s Raises India’s FY27 GDP Growth Forecast to 7%
Rating Agencies Raise India’s FY27 Growth Forecasts Amid Strong Demand
Warsh and G7 Central Banks Face Renewed Inflation Test
Fitch Raises India's FY27 Growth Forecast to 6.9% on Momentum
India’s Q1 FY27 Growth Beats Forecast Despite Iran War Fears
Silver Outlook: Rate Cuts Could Lift Prices Toward ₹3.25 Lakh
Global Rate Hikes Put Indian Stocks Under Fresh Pressure
