The United Nations has lowered their forecast for global economic growth and increased their inflation projections for this year, in response to the crisis in the Middle East and rising oil prices.
UN economists say that global GDP growth is now expected to be 2.5% in 2026, down from 2.7% in January, and could drop to just 2.1% “in a more adverse scenario.”
This would be one of the slowest growth rates of this century, excluding the COVID-19 pandemic and the 2008 global financial crisis, according to 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 might see their economy shrink.
Global inflation is expected to reach 3.9% this year, 0.8 points higher than what was projected in January, before the US and Israel launched airstrikes against Iran. Iran retaliated by blocking the Strait of Hormuz, a vital maritime route for transporting oil, natural gas, fertilizer, and other petroleum products.
“The rise in energy prices is a powerful factor, as is that of refined products which are essential for industrial production and commercial transportation,” Mukherjee emphasized.
Not all countries will experience the same inflation, he insisted. In the richest developed economies, inflation is expected to increase from 2.6% in 2025 to 2.9% in 2026.
In developing countries, it is projected to accelerate from 4.2% to 5.2%, with the rising costs of energy, transportation, and imported goods eroding real incomes.
The impact of the war in Iran varies greatly, with the most severe economic damages concentrated in West Asia – a region comprising 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 expected to drop from 3.6% in 2025 to 1.4% in 2026, “due not only to the energy shock but also to direct damage to infrastructure and severe disruptions in oil production, trade, and tourism.”
In Africa, average growth is only expected to slightly decrease, from 4.2% last year to 3.9% this year. In Latin America and the Caribbean, it is forecasted to slow down from 2.5% to 2.3%.
The economy of the United States is expected to remain “relatively resilient,” with a 2% growth anticipated this year, generally in line with that of 2025.
Europe, on the other hand, “is more exposed, with its heavy reliance 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 further decline from 1.4% last year to 0.7% this year.
In Asia, China’s diversified energy mix, strategic reserves, and government support act as buffers, with economic growth expected to only slow down from 5% in 2025 to 4.6% this year.
India is set to remain one of the fastest-growing major economies, with an expansion of 6.4% projected this year, compared to 7.5% in 2025.
“For China, as well as for 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.
