UN lowers forecast for global economic growth in 2026 over Mideast
energy crisis
[May 20, 2026] By
EDITH M. LEDERER
UNITED NATIONS (AP) — Responding to Middle East crises and rising oil
prices, the United Nations on Tuesday lowered its forecast for global
economic growth and raised the prospects for inflation this year.
U.N. economists said global GDP growth is now forecast at 2.5% for 2026,
down from 2.7% in January, and they said it could fall to only 2.1% “in
a more adverse scenario.”
That would be one of the weakest growth rates this century, outside of
the COVID-19 pandemic and the global financial crisis of 2008, Shantanu
Mukherjee, director of economic analysis in the U.N. Department of
Economic and Social Affairs, said at a news conference.
On a somewhat positive note, he said, “we are not close” to a recession,
but life can get harder for billions of people, and some countries may
see their economies contract.
Global inflation is projected to rise to 3.9% this year, 0.8% higher
than forecast in January, before the U.S. and Israel launched airstrikes
on Iran. Iran responded by blocking the Strait of Hormuz, a critical
waterway for shipments of oil, natural gas, fertilizer and other
petroleum products.
“ Increased energy prices are a potent factor, as are the prices of
refinery products that are crucial to industrial production and
commercial transport,” Mukherjee said.
But he stressed that not all countries will experience the same rate of
inflation.
In richer developed countries, inflation is projected to rise from 2.6%
in 2025 to 2.9% in 2026. In developing countries, inflation is forecast
to accelerate from 4.2% to 5.2% as higher costs for energy,
transportation and imported goods erode real incomes.
The impact of the Iran war has been highly uneven, with the most severe
economic damage concentrated in West Asia, a region comprised of 21 Arab
countries, including those in the Persian Gulf, according to the World
Economic Situation and Prospects report for mid-2026.
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The South Korean-operated vessel HMM NAMU is docked after being
damaged from a fire following an explosion in the Strait of Hormuz,
at a port in Dubai, United Arab Emirates, Friday, May 8, 2026. (Kim
Sang-hun/Yonhap via AP)
 Economic growth in the region is
projected to plunge from 3.6% in 2025 to 1.4% in 2026, “driven not
only by the energy shock but also by direct infrastructure damage
and severe disruptions to oil production, trade and tourism.”
In Africa, average growth is projected to drop only slightly, from
4.2% last year to 3.9% this year, according to the report. And in
Latin America and the Caribbean, it is forecast to slow from 2.5% to
2.3% in 2026.
In the United States, the economy is expected to remain
“comparatively resilient” with 2% growth forecast this year, broadly
similar to 2025, it said.
By contract, Europe “is more exposed, with heavy reliance on
imported energy straining households and businesses,” the economists
said. Economic growth in the European Union is expected to slow from
1.5% in 2025 to 1.1% in 2026, while growth in the United Kingdom is
forecast to drop further, from 1.4% last year to 0.7% this year.
In Asia, the U.N. said China’s diversified energy mix, sizable
strategic reserves and government actions are providing a buffer, so
its economic growth is only expected to slow from 5% in 2025 to 4.6%
this year.
India is forecast to remain one of the fastest growing major
economics, with its economy expanding by 6.4% this year, although
that is lower than its 7.5% growth in 2025.
“The question for China, similar to the case of India and other
countries, is just how long with this conflict and the impact of the
conflict last, because all these different buffers are clearly
limited,” senior U.N. economist Ingo Pitterle told reporters.
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