UN warns global food, growth risks

The United Nations cut its 2026 global growth forecast and said rising Middle East tensions were increasing the risk that higher energy and transport costs feed back into inflation. UN DESA said in its 2026 World Economic Situation and Prospects report that global output is now expected to grow 2.7% in 2026, below the 2.8% estimated for 2025 and below the pre-pandemic average of 3.2%. UN Trade and Development, or UNCTAD, has also warned that merchandise trade is losing momentum, while the UN’s food agency says the next shock could show up in grocery bills. The warnings are converging around the same transmission channels. UNCTAD said higher energy prices, transport disruptions, market volatility and demand for financial safe assets were weighing on the outlook. The Food and Agriculture Organization, or FAO, has warned that a severe global food-price crisis could emerge within six to 12 months if disruptions to energy and fertilizer flows persist. ### What exactly did the UN cut? UN DESA said global growth in 2026 is now forecast at 2.7%, a modest downgrade but one that comes with a sharper warning on inflation risks. The agency said tensions in the Middle East could raise energy, transport and import costs, adding pressure to consumer prices even as some economies had been benefiting from easing inflation. The UNCTAD version of the warning is slightly darker on trade. In a rapid assessment published this week, the agency said merchandise trade growth could slow from 4.7% in 2025 to between 1.5% and 2.5% in 2026 as uncertainty and geopolitical tensions affect supply chains, shipping and investment decisions. ### Why are energy and shipping at the center of this story? UNCTAD said the main risk is that geopolitical disruption pushes up fuel and freight costs at the same time. That combination hits import bills, squeezes company margins and raises the cost of moving raw materials, food and finished goods across borders. The IMF made the same point from a policy angle on May 20. In a blog post on responding to the energy and food price shock, the Fund said governments should let domestic energy prices reflect international costs, shield vulnerable households with targeted, temporary support and support viable small businesses with liquidity rather than broad price controls. ### How does this become a food story? The FAO warning centers on fertilizer and shipping routes. Global News, citing the agency, reported that the FAO sees a severe global food-price crisis as possible within six to 12 months if governments do not act quickly to manage the fallout from disrupted flows through the Strait of Hormuz. FAO’s own price data already show food costs moving higher. The FAO Food Price Index averaged 130.7 points in April 2026, up 1.6% from March and marking a third straight monthly increase, driven by vegetable oils, meat and cereals. ### Which countries are most exposed? India offers one example of the trade-off policymakers are facing. UN reporting cited by Indian media said the country’s 2026 growth forecast was cut to 6.4%, though it remains among the fastest-growing major economies. Higher oil prices are a fiscal problem as well as an inflation problem for importers. The IMF said broad subsidies and price caps should be reserved for exceptional shocks, arguing that untargeted support can strain public finances and weaken the price signals governments are trying to preserve. ### What should readers watch next? The next checkpoints are likely to come from monthly food-price data and any fresh UN trade updates. The FAO’s next Food Price Index release and future UNCTAD assessments will show whether higher shipping and energy costs are spilling further into food markets and global trade volumes.