00:01The OECD warns that if the Middle East conflict drags on, it could drive the global economy into recession with
00:10energy shortages worldwide.
00:12The Organization for Economic Cooperation and Development released its latest economic outlook, painting a concerning picture for the global economy.
00:22Ongoing disruptions from the Middle East conflict, particularly around the Strait of Hormuz, are already impacting energy markets.
00:30The OECD highlights two main scenarios, a baseline where disruptions ease mid-year and a severe prolonged case if the
00:39conflict continues deep into 2027.
00:47In the baseline scenario, assuming energy disruptions start to ease by the middle of this year, global growth is projected
00:55to slow from 3.4% in 2025 to 2.8% in 2026 before recovering to 3.1%
01:06in 2027.
01:07This is still a noticeable slowdown with higher inflation persisting due to elevated energy costs.
01:14Major economies including the US, Euro area and UK have seen their forecasts downgraded.
01:27But if the conflict drags on into next year with persistent closures of key energy routes and infrastructure damage, the
01:35outlook darkens dramatically.
01:37Global growth could fall sharply to 2.1% in 2026 and just 1.8% in 2027, levels not
01:46seen outside major crises like 2008 or COVID.
01:50This would push some economies into outright recession, with Asian countries heavily reliant on Middle East energy hit especially hard.
01:59Energy shortages could lead to enforced rationing for businesses, spiking prices for oil, gas, fertilizers, sulfur and other inputs, disrupting
02:10industries and food production.
02:18The ripple effects include higher inflation worldwide, strained supply chains and reduced consumer spending.
02:27Developing and emerging economies face the greatest risks due to higher energy dependence and limited buffers.
02:34The OECD stresses that prolonged uncertainty could reshape policy priorities with central banks balancing growth and inflation pressures.
02:50While the global economy has shown resilience, the OECD warns that diplomacy and energy diversification are critical to mitigating these
03:01risks.
03:02Stay tuned as this story develops for more in-depth economic analysis, subscribe and hit the notification bell.
Comments