UN cuts 2026 global growth to 2.5%

The United Nations cut its 2026 global growth forecast to 2.5% from 2.7% in a mid-year update released in May, saying the Middle East crisis was darkening the outlook, lifting inflation and adding uncertainty across financial markets. The new forecast came from the UN Department of Economic and Social Affairs’ “World Economic Situation and Prospects as of mid-2026,” which updated the baseline published on January 8. The report said global inflation is now expected to reach 3.9% in 2026, up 0.8 percentage points from the January forecast. It said the closure of the Strait of Hormuz — a route for about one fifth of global oil and liquefied natural gas supplies — is pushing up fuel, fertilizer and food prices. ### What changed from the UN’s January forecast? The January 2026 edition of the same UN report had forecast 2.7% global growth in 2026. The mid-year update lowered that to 2.5%, while keeping 2027 at 2.8%. The report said the downgrade came after an already subdued outlook at the start of the year. (desapublications.un.org) The UN’s table of revisions shows the global 2026 forecast was cut by 0.2 percentage points from January. Developed economies were trimmed to 1.5% from 1.6%, while developing economies were cut to 3.9% from 4.2%. World trade growth for 2026 was revised up to 2.7% from 2.2%, according to the same table. ### Why did the UN tie the downgrade to the Middle East? (desapublications.un.org) The mid-year update said the global economy is “under stress” because the Middle East crisis is clouding the growth outlook and stoking inflationary pressure. It said forecast uncertainty has risen because outcomes depend on the conflict’s duration and scale. The report linked that risk directly to energy transit. (policy.desa.un.org) It said disruption at the Strait of Hormuz is raising prices for fuel, fertilizer and food and straining supply chains. It also said financial market volatility has increased, with risks of renewed portfolio outflows and tighter external financing conditions if the conflict persists. (desapublications.un.org) ### Where was the biggest regional hit? Western Asia saw the steepest downgrade in the UN’s regional table. The UN cut its 2026 growth forecast for the region to 1.4% from 3.6% in January, a 2.2-point reduction. The table also showed a 2027 rebound forecast of 4.3%. South Asia was also marked down. The UN lowered its 2026 forecast for South Asia to 4.6% from 5.6%, including a cut for India to 6.4% from 6.6%. (desapublications.un.org) East and South Asia as a broader grouping was revised to 4.5% from 4.6%. ### What does the inflation revision tell us? Global inflation is now projected at 3.9% in 2026, compared with 3.1% in the January forecast, the UN said. (policy.desa.un.org) The report described that as a reversal of the disinflation trend and said higher prices would erode household purchasing power. The UN said central banks are expected to keep rates higher for longer to curb inflation, while governments face added fiscal pressure from weaker growth and crisis-related spending. (policy.desa.un.org) It added that resilient labor markets and artificial-intelligence-driven trade and investment are supporting activity, but are unlikely to offset the broader headwinds. (desapublications.un.org) ### Which countries and households does the UN say are most exposed? Fuel- and food-importing developing economies face the toughest outlook, the report said. The UN said higher import costs could widen fiscal deficits, strain external balances and deepen food insecurity in those countries. Low-income households spend the largest share of their budgets on food and energy, the report said, leaving them with the heaviest burden from the latest price shock. (desapublications.un.org) The UN also said declining aid flows and rising debt-service costs could reverse development gains and slow progress toward the Sustainable Development Goals. ### What is the next benchmark to watch? (desapublications.un.org) The report says its estimates and forecasts are based on data and information available up to May 1, 2026. The next formal benchmark will be the UN’s subsequent update to the World Economic Situation and Prospects, after this mid-year revision to the January 8 baseline. (policy.desa.un.org) (desapublications.un.org)