Iran war: growth shock
The Iran‑linked Middle East war is now projected to shave global growth and lift inflation — the OECD warns world GDP will slow from 3.3% to 2.9% in 2026 with only a 3.0% rebound in 2027. That shock could push US inflation as high as 4.2% in 2026 and trims US growth to roughly 2% next year, while the UK is expected to suffer the biggest hit among major economies. (theglobeandmail.com) (businesstoday.in) (bbc.co.uk)
The OECD published an Interim Economic Outlook on March 26, 2026 updating its December 2025 assessment and said the Middle East conflict is testing the global economy’s resilience. (oecd.org) The OECD’s update flags a jump in average G20 headline inflation to about 4% this year, driven largely by energy-price pressures linked to the conflict. (bloomberg.com) The IEA reports crude and product flows through the Strait of Hormuz plunged from around 20 million barrels per day before the war to a trickle, with Gulf producers cutting at least 10 mb/d and member countries releasing 400 million barrels from strategic reserves. (iea.org) Market forecasters say the shock pushed Dated Brent briefly into the high $80s–$90s per barrel in March but many baseline scenarios assume a partial normalization toward roughly $60/b by year‑end if shipping is restored. (spglobal.com) The OECD singled out the UK for a notable downgrade, trimming its 2026 growth profile from about 1.2% to roughly 0.7% while lifting its inflation projection to near 4.0% in the revised outlook. (bloomberg.com) The report warned central banks should “remain vigilant” and that monetary-policy adjustments may be needed if price pressures broaden, a stance echoed by rapid shifts in markets and futures pricing since the conflict began. (oecd.org) The OECD urged governments to use well‑targeted fiscal measures with clear expiry rules to shield vulnerable households and to accelerate energy‑efficiency and diversification policies to reduce future exposure to Middle East supply shocks. (oecd.org)
