OECD Nudges Up 2026 Global Growth To 2.9% On AI Surge, But Warns Of 2027 Energy Drag

The Organisation for Economic Co-operation and Development raised its 2026 global growth projection to 2.9%, noting that a notable increase in investment in AI infrastructure is temporarily reducing the economic impact of high oil prices driven by the Middle East wars.

The organisation did, however, issue a warning that this technological resilience faces impending downside risks from bond yield surges, entrenched energy shocks, and possible disappointments in AI investment returns until 2027, as reported by Reuters.

The OECD stated in its intermediate economic outlook that the world economy will slow to 2.9% growth in 2026 after growing by 3.4% last year, which is marginally better than the 2.8% expected in June.

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The OECD predicts that global growth would only climb to 3.0% in 2027 from 3.1% in June due to the commodity price shock brought on by the Middle East conflict.

Strong spending on AI infrastructure, from data centres to semiconductors, has been a major pillar of resilience this year, according to the OECD, boosting GDP in the US and increasing technology exports from Korea and Japan.

However, it cautioned that the global outlook remained especially uncertain due to possible volatility in energy markets, severe weather linked to a strong El Niño, rising government bond yields, and underwhelming returns from AI investments. 

If those risks were to materialise, the OECD estimated they could collectively reduce global growth by 0.7 percentage points next year and increase global inflation by 1.1 percentage points. 

According to the OECD's baseline outlook, inflation in G20 economies is projected at 4.1% in 2026, an increase from the 4.0% forecast made in June. The OECD also increased its 2027 forecast to 3.6%, up from 3.1% in June, noting that this could compel central banks to revise interest rates if inflationary pressures spread or economic growth slows. 

In the US, the world's largest economy, growth is projected at 2.2% this year and 2.1% in 2027, both higher than previously estimated in June due to substantial AI-related investment that counterbalances slower consumer spending. US inflation is expected to reach 3.6% in 2026, then decline to 2.6% in 2027, as tariffs and rising energy prices reduce consumers' buying power and increase business expenses. 

China's growth is projected to decelerate to 4.5% this year and 4.2% in 2027, unchanged from the June forecast, as Beijing's measures to reduce overcapacity are dampening investment, even as consumption sees a gradual uptick amid rising inflation. 

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Growth in the euro zone is expected to remain at 1.0% in both 2026 and 2027, as elevated energy costs and interest rates dampen economic activity prior to new defence spending helping to boost momentum. 

Inflation in the euro zone is expected to be 3.0% this year and 2.9% by 2027, partly due to rising natural gas prices as European storage levels fall to their lowest in 15 years ahead of the winter heating season. 

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