UN cuts 2026 growth forecast to 2.5%

The United Nations said on May 19 that it had cut its forecast for global economic growth in 2026 to 2.5% from the 2.7% it projected in January, citing a new shock from the Middle East crisis. The revision came in the UN Department of Economic and Social Affairs’ mid-year update to its World Economic Situation and Prospects report. The report said higher energy costs, weaker trade and tighter financial conditions were weighing on an already subdued outlook. It also said global inflation was now expected to reach 3.9% in 2026, reversing the disinflation trend that had been underway since 2023. ### Where did the new forecast come from? The UN Department of Economic and Social Affairs published the mid-2026 update on May 19 in New York as a revision to the World Economic Situation and Prospects 2026 report released on January 8. The updated document said global growth was now projected at 2.5% in 2026 and 2.8% in 2027, both below the January forecasts. (desapublications.un.org) The January 2026 report had forecast global output growth of 2.7% in 2026 and 2.9% in 2027. The new numbers therefore represent a 0.2 percentage point downgrade for 2026 and a 0.1 point downgrade for 2027. ### What does the UN say changed since January? (desapublications.un.org) The mid-year update said “the crisis in the Middle East” had delivered another shock to the world economy by slowing growth, reigniting inflationary pressures and increasing uncertainty. The report pointed to disruptions in energy markets and said the closure of the Strait of Hormuz, which it described as a route for about one fifth of global oil and liquefied natural gas supplies, was driving up fuel, fertilizer and food prices and straining supply chains. (desapublications.un.org) Shantanu Mukherjee, director of the Economic Analysis and Policy Division at UN DESA, said at a May 19 briefing that what began as a blow to energy markets on February 28 had turned into a broader supply shock. He said the shift over “11 weeks or so” had forced the UN to revise its global GDP forecast down to 2.5% for 2026. (desapublications.un.org) ### Why did inflation move higher in the update? The report said global inflation was now expected to reach 3.9% in 2026, which it described as 0.8 percentage points above the January forecast. It said the energy shock had halted the global disinflation trend, with higher energy prices feeding through to transport, industrial inputs and broader consumer costs. (media.un.org) Mukherjee said increased energy prices and the prices of refinery products crucial to industrial production and commercial transport were major drivers of the revision. The UN’s press release said inflation in developed economies was forecast to rise to 2.9% in 2026 from 2.6% in 2025, while inflation in developing economies was projected to increase to 5.2% from 4.2%. (desapublications.un.org) ### Which countries does the UN say are most exposed? The mid-year update said the outlook was most difficult for fuel- and food-importing developing economies. It said higher import costs risked widening fiscal deficits, straining external balances and worsening food insecurity, while low-income households were likely to bear the heaviest burden because they spend a larger share of income on food and energy. (media.un.org) The UN policy page said energy-importing developing economies were bearing the brunt of the crisis, with high debt and limited fiscal space constraining governments’ ability to respond. The press release added that tighter external financing conditions were weakening fiscal positions in countries where policy space was already limited. (desapublications.un.org) ### What happens next? The UN DESA policy page now hosts the mid-2026 update, key messages and downloadable GDP growth and inflation data tables. The report said the 2027 global growth forecast stands at 2.8%, but also said outcomes depend on the duration of the conflict and the pace of any recovery in energy flows. (policy.desa.un.org)