Overview
- On Wednesday the OECD lowered its baseline world growth forecast to 2.8% for 2026 from 3.4% in 2025 and warned a prolonged Gulf disruption could cut growth to 2.1% in 2026 and 1.8% in 2027.
- The organisation ties the downgrade to the Iran war’s disruption of shipping through the Strait of Hormuz and damage to Gulf production that pushed oil and key input prices higher.
- The OECD projects average Brent prices near $92 a barrel in 2026 and $80 in 2027 under its baseline and says a prolonged disruption could make energy prices about 50% higher between Q3 2026 and Q3 2027.
- It criticises broad fiscal fixes such as across-the-board tax cuts and price caps for weakening energy-saving incentives and calls for time-limited, targeted support for the most vulnerable households and viable firms.
- For Germany the OECD now expects 0.7% GDP growth in 2026 and recommends boosting public spending efficiency, widening the tax base, easing bureaucracy, tackling labour shortages, and speeding infrastructure and clean-energy investment to build resilience.