Global economic growth could slow to levels seen during the Covid-19 pandemic and the global financial crisis if the Iran war drags on, the Organisation for Economic Cooperation and Development (OECD) has warned.

A “prolonged disruption” to energy flows from the Middle East that persists well into 2027 would see global growth slow to 2.1% in 2026 and 1.8% in 2027, the Paris-based organisation said in its latest global economic outlook.

“Such rates are extremely low outside of major global recessions such as the global financial crisis or the pandemic,” it noted, warning that such a scenario would leave a “lasting mark on many countries, especially in Asia.”

If the conflict is resolved more quickly, the OECD sees global economic growth slowing from 3.4% in 2025 to 2.8% in 2026 before picking up to 3.1% in 2027, broadly in line with its pre-war forecasts.

“The global economy entered 2026 with robust momentum, but the outlook has weakened significantly since the start of the conflict in the Middle East, with effects likely to be felt for some time,” OECD Secretary-General Mathias Cormann said. “The longer the disruptions last, the larger the economic and social costs become.”

Speaking to reporters, Cormann said that the current spike in fertilizer prices because of reduced flows through the Strait of Hormuz, if sustained, could send wheat prices up by 13%.

“This is not an abstract risk, it is a very real food security risk and it will fall hardest on the most vulnerable economies,” he said.

Source: CNN

– Agencies