The Organisation for Economic Co-operation and Development (OECD) has raised its 2026 global growth projection to 2.9%, up from the 2.8% forecast made in June. According to the OECD's intermediate economic outlook, this represents a marginal improvement from the 3.4% growth recorded last year. The upgrade, released on Wednesday, is 0.1 percentage point above the OECD's June forecast. The revision comes as the world economy shows resilience despite ongoing challenges, with the OECD noting that AI infrastructure investment is temporarily reducing the economic impact of high oil prices driven by Middle East wars. However, the organisation lowered its 2027 growth projection to 3.0% from 3.1% as the Middle East energy shock is expected to weigh more heavily on the global economy. As per Reuters, the OECD said AI-led investment is helping the global economy hold up marginally better than expected this year, but the energy shock is becoming more entrenched, weighing on the outlook for 2027. The 38-member OECD emphasized that growth remained 'resilient' in 2026, with 'broader financial conditions remain supportive' according to the Paris-based forum for industrialized nations.
Strong spending on AI infrastructure, from data centres to semiconductors, has emerged as a major pillar of economic resilience this year. As reported by the OECD, this investment has boosted GDP in the US and increased technology exports from Korea and Japan. The organisation noted that US 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. The OECD said artificial intelligence-related investment has provided some important source of support for economic activity this year, helping offset some of the effects of higher energy prices and continuing geopolitical uncertainty. However, the OECD cautioned that this technological resilience faces downside risks from bond yield surges and possible disappointments in AI investment returns. In the US, the world's largest economy, growth is seen at 2.2% this year and 2.1% in 2027, both upgrades from June, as heavy AI-related investment offsets weaker consumer spending. The OECD noted that investments in artificial intelligence could result in 'stronger growth than projected', but warned that growth could still slow if investments do not pay off as expected.
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 organisation 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. 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. The outlook nevertheless shows growing inflation risks, with the OECD expecting inflation across the Group of 20 major economies to average 4.1 per cent in 2026. In the OECD's baseline outlook, inflation in G20 economies was seen at 4.1% in 2026, up from 4.0% forecast in June, with the OECD raising its 2027 forecast to 3.6%, from 3.1% in June, which it said could force central banks to adjust interest rates if price pressures broaden out or growth falters.
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. 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 before new defence spending initiatives provide support. 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. The OECD raised its 2026 growth forecast for the United States to 2.2% and Japan to 0.8%, both forecasts also increased by 0.2 percentage points. Japan's economy is expected to grow 0.8% in 2026 and 0.7% in 2027, with rising policy rates and costlier energy imports offsetting strong business investment. Unlike other major economies, Japan's inflation is seen accelerating to 2.6% in 2027 from 1.8% this year, reflecting a tight labour market and strong wage growth. Canada's 2026 growth forecast was cut to 0.9% from 1.2% in June while its 2027 outlook was lowered to 1.3% from 1.7% due to the new US tariffs on Canadian exports.
