UN lowers forecast for global economic growth in 2026 over Mideast energy crisis

The United Nations revised its global economic outlook downward on Tuesday, projecting 2.5% GDP growth for 2026—down from 2.7% in January—due to escalating Middle East conflicts and surging oil prices. In a worse-case scenario, growth could drop to just 2.1%, among the weakest rates this century outside of the COVID-19 pandemic and 2008 financial crisis. Shantanu Mukherjee, director of economic analysis at the UN Department of Economic and Social Affairs, warned that while a recession remains unlikely, rising living costs will strain billions. Inflation is now expected to hit 3.9% globally this year, up 0.8% from January’s forecast, following U.S. and Israeli airstrikes on Iran and Iran’s subsequent blockade of the Strait of Hormuz. Higher energy and refinery product prices threaten industrial production and transport costs, though inflation impacts will vary by region. Developed economies face inflation rising from 2.6% in 2025 to 2.9% in 2026, while developing nations see inflation jump from 4.2% to 5.2%, eroding purchasing power. West Asia, including Persian Gulf states, will suffer the most severe economic damage, with growth collapsing from 3.6% in 2025 to 1.4% in 2026. The decline stems from energy disruptions, infrastructure damage, and trade tourism losses. Africa’s growth slows modestly to 3.9%, and Latin America’s drops from 2.5% to 2.3%, but the U.S. remains resilient at 2% growth. Europe and the UK are more vulnerable, with EU growth falling to 1.1% and the UK’s to 0.7%, due to reliance on imported energy. China’s growth is projected to ease from 5% to 4.6%, cushioned by diversified energy sources and government reserves, while India retains strong expansion at 6.4%, though down from 7.5% in 2025. Senior UN economist Ingo Pitterle noted that prolonged conflict risks overwhelming even these buffers, leaving global economic stability uncertain.