The United Nations has revised down their global economic growth forecast and raised their inflation projections for this year in response to the crisis in the Middle East and rising oil prices.
UN economists indicate that global GDP growth is now expected to be 2.5% in 2026, down from 2.7% in January, and could drop to as low as 2.1% in a more unfavorable scenario. This would be one of the slowest growth rates of this century, excluding the COVID-19 pandemic and the 2008 global financial crisis, said Shantanu Mukherjee, Director of Economic Analysis at the UN Department of Economic and Social Affairs.
“We are not close to a recession,” he assured, while warning that life could become more complicated for billions of people and some countries may see their economies contract.
Global inflation is projected to reach 3.9% this year, 0.8 percentage points higher than what was expected in January, before the United States and Israel launched airstrikes against Iran. Iran responded by blocking the Strait of Hormuz, a key maritime route for transporting oil, natural gas, fertilizers, and other oil products.
“The rise in energy prices is a powerful factor, as is that of refined products essential to industrial production and commercial transport,” Mukherjee emphasized.
Not all countries will experience the same inflation, he insisted. In the wealthiest developed economies, inflation is expected to increase from 2.6% in 2025 to 2.9% in 2026.
In developing countries, it is expected to accelerate from 4.2% to 5.2%, with rising energy, transport, and imported goods costs eroding real incomes.
The impact of the war in Iran is highly uneven, with the most severe economic damage focused in Western Asia – a region that includes 21 Arab countries, including those in the Persian Gulf – according to the “World Economic Situation and Prospects” report in mid-2026.
In this region, economic growth is forecast to fall from 3.6% in 2025 to 1.4% in 2026, “due not only to the energy shock, but also the direct damage to infrastructure and serious disruptions to oil production, trade, and tourism.”
In Africa, average growth is expected to slightly decline from 4.2% last year to 3.9% this year. In Latin America and the Caribbean, it is expected to slow from 2.5% to 2.3%.
The US economy is expected to remain “relatively resilient,” with 2% growth projected for this year, roughly in line with 2025.
Europe, on the other hand, “is more exposed, with its strong dependence on imported energy putting pressure on households and businesses.” Economic growth in the EU is expected to slow from 1.5% in 2025 to 1.1% in 2026, while the UK’s growth would decline further from 1.4% last year to 0.7% this year.
In Asia, China’s diversification of energy sources, strategic reserves, and government support act as buffers, with economic growth expected to slow from 5% in 2025 to 4.6% this year.
India is expected to remain one of the fastest-growing major economies, with an expansion of 6.4% forecast for this year, down from 7.5% in 2025.
“For China, as well as India and other countries, the question is how long this conflict and its effects will last, as all these different buffers are clearly limited,” said UN Chief Economist Ingo Pitterle.
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