Global economic growth is projected to ease to 2.9% in 2026 from 3.3% in 2025, before edging up to 3.0% in 2027, the Organization for Economic Cooperation and Development (OECD) said in its latest Economic Outlook on Thursday.

The report said that the evolving conflict in the Middle East will test the resilience of the global economy. A prolonged period of higher energy prices would add markedly to business costs, raise consumer price inflation and have adverse consequences for growth.

Prior to the escalation of the conflict, global growth remained resilient due to strong AI-related investment and production as well as favourable fiscal conditions, the report said.

Since the conflict in the Middle East, surging energy prices and heightened uncertainty have raised costs and dampened demand, offsetting earlier growth momentum, the report added.