Global economic growth is set to fall to 2.8% this year from 3.4% in 2025 before rising to 3.1% in 2027, the Organisation for Economic Co-operation and Development (OECD) forecast on Wednesday.
The longer the Middle East conflict lasts, the greater the economic and social costs will be, the body representing 38 highly developed economies predicts.
If the war lasts well into 2027, global growth could fall to 2.1% this year and 1.8% next year.
The Paris-based OECD forecasts that US growth will come in at around 2% this year, and 1.8% in 2027. While private consumption will be impacted by the energy shock and uncertainty resulting from the conflict, strong investment in artificial intelligence will provide a boost.
Turning to the eurozone, the OECD sees growth this year at 0.8%, rising to 1.2% next year, with domestic demand and growth in trade providing a lift.
For Germany, the OECD is predicting growth of 0.7% this year, rising to 1.1% in 2027. Both forecasts have been cut from the March predictions on the basis of rising energy costs.
Further escalation in global trade tensions would hit the country's trade, as German industry is highly integrated in global supply chains.
In China, growth is predicted to come in at 4.5% this year, slowing to 4.3% in 2027.
China's high energy consumption and dependence on imports make the country vulnerable to rises in the global oil price, the OECD notes, while also pointing to increasing use of renewables and large reserves as mitigating factors.
