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

The United Nations has lowered its forecast for global economic growth in 2026 to 2.5%, down from 2.7% in January, citing Middle East crises and rising oil prices. In a more severe scenario, growth could fall to 2.1%, marking one of the weakest rates since the 2008 financial crisis, according to Shantanu Mukherjee, director of economic analysis at the U.N. Department of Economic and Social Affairs. Global inflation is now projected to reach 3.9% this year, up from the January forecast of 3.1%, driven by higher energy costs and disruptions in industrial production and transport. Developed nations face inflation rising from 2.6% in 2025 to 2.9% in 2026, while developing countries see a sharper increase from 4.2% to 5.2%, eroding real incomes. The conflict between the U.S., Israel, and Iran has disproportionately affected West Asia, where economic growth is expected to plummet from 3.6% in 2025 to 1.4% in 2026 due to energy shocks, infrastructure damage, and trade disruptions. Africa’s growth is projected to dip slightly from 4.2% to 3.9%, while Latin America and the Caribbean slow from 2.5% to 2.3%. The U.S. economy remains resilient with 2% growth forecast for 2026, but Europe faces greater vulnerability, with the EU’s growth slowing from 1.5% to 1.1% and the UK’s dropping from 1.4% to 0.7%. China’s growth is expected to ease from 5% to 4.6%, supported by diversified energy sources and government interventions, while India’s economy is projected to expand by 6.4%, though slower than its 7.5% growth in 2025. The duration of the Middle East conflict remains a critical uncertainty, as energy buffers and reserves in countries like China and India may not sustain long-term resilience. The U.N. warns that prolonged disruptions could deepen economic strains globally, particularly for vulnerable regions.