Global inflation is expected to remain higher than previously forecast throughout next year, while the world economy will continue to grow at a slower pace, the Organisation for Economic Co-operation and Development (OECD) warns in its latest interim economic outlook.
The OECD projects that the global economy will grow by 2.9 percent in 2026 and 3 percent in 2027. Although the global economy has shown greater resilience than expected in the face of the energy shock and conflict in the Middle East, growth remains weaker than the 3.4 percent recorded in 2025.
Price developments are a growing concern. Average inflation across the G20 economies is expected to rise from 3.4 percent in 2025 to 4.1 percent this year. Inflation is projected to ease in 2027, but is still expected to remain at 3.6 percent — significantly higher than previously forecast.
According to the OECD, renewed increases in oil and natural gas prices could further raise production, transportation and food costs. The organization warns that renewed or prolonged disruptions to energy supplies could simultaneously drive inflation higher and weaken economic growth.
“The global economy has weathered yet another shock better than expected, but its ability to absorb further shocks is not unlimited,” OECD Secretary-General Mathias Cormann said. He warned that energy reserves are declining, governments have less room for financial support, and borrowing costs are rising.
Another risk comes from rising government bond yields. Thirty-year yields in six of the world’s seven largest advanced economies are at their highest levels in at least 15 years. This means higher borrowing costs for governments, businesses and households.
In the United States, inflation measured by the personal consumption expenditures (PCE) price index is expected to reach 3.7 percent in 2026. The U.S. Federal Reserve recently raised its benchmark interest rate by 0.25 percentage points, bringing the target range to 3.75%–4%.
Projections from Federal Reserve officials indicate that another rate increase could be possible by the end of the year. The central bank expects inflation to gradually decline over the coming years, but does not expect it to return to its 2% target until 2029.
Higher interest rates make borrowing more expensive and can reduce consumer spending and business investment. However, central banks consider tighter monetary policy necessary to prevent inflation from becoming entrenched over the long term.
The OECD called on governments to carefully target support measures toward the households and businesses most affected, while avoiding policies that could further stimulate demand and push prices higher.
