PARIS, FRANCE / RankWire.AI / – The OECD has increased its projection for global growth in 2026 to 2.9%, citing a stronger resilience across the world economy. This estimate has been revised upward from 2.8% in its June forecast, while the organization has reduced its 2027 outlook to 3.0% from 3.1%. Continued investment in artificial intelligence has remained a key driver supporting economic activity and trade. Nonetheless, rising energy costs and inflation continue to exert significant pressure on households and businesses in major economies.
Despite performing better than earlier estimates, global growth slowed during the first half of 2026. The annualized rate declined to 2.6%, down from 3.6% in the latter half of 2025. Energy market disruptions were cushioned by oil inventories and increased production outside the Gulf, while alternative supply routes helped maintain fuel flow to international markets. Weaker oil demand from China also offset some pressures as nations adjusted to higher prices and shifting supply dynamics.
Technology expenditure continued to bolster manufacturing and exports. Shipments of semiconductors saw notable gains in Korea and Japan, and China also reported improvements in technology exports. Industrial production related to technology expanded across much of Asia, with similar investment supporting activity in the United States and parts of Europe. Consumer confidence improved in several advanced economies after May, and unemployment rates remained low in many regions, although increased fuel costs diminished household purchasing power.
US Economy Sets Growth Expectations for Major Advanced Markets
The US economy is forecast to grow by 2.2% in 2026 and 2.1% in 2027. Ongoing investments in artificial intelligence continue to bolster business activity, although slower consumer spending caps overall growth. The eurozone is expected to expand by 1.0% in both years, with higher energy prices and interest rates weighing on demand. Japan is projected to grow by 0.8% in 2026, with growth easing to 0.7% in 2027.
China is predicted to expand by 4.5% in 2026 and 4.2% in 2027, while India is set to grow 7.1% in fiscal year 2026-27 after 7.8% in the previous year. Its economy is forecast to increase by 6.5% in fiscal year 2027-28. Indonesia is expected to record growth of 5.2% in 2026 and 5.1% in 2027. Mexico’s expansion is projected at 1.5% this year and 1.8% in 2027.
Energy Price Rises Keep Inflation Elevated in G20 Countries
Inflation remains a central concern in the OECD outlook. G20 economies are forecast to experience headline inflation of 4.1% in 2026, up from 3.4% in 2025, with a decline expected to 3.6% in 2027. Advanced G20 nations are projected to see inflation of 3.2% this year and 2.6% next. In the US, inflation is forecast to decrease from 3.6% in 2026 to 2.6% in 2027, while in the euro area, it is expected at 3.0% and 2.9%, respectively.
According to the OECD, rising energy prices have increased household expenses and added inflationary pressures in many economies. Additionally, long-term government bond yields have climbed as borrowing and debt-servicing costs grow. OECD Secretary-General Mathias Cormann remarked that global growth had held up better than expected but remained weaker than last year. The organization emphasized the importance of sustainable public finances and targeted temporary support, highlighting productivity, skills, diversified energy supplies, and broader adoption of artificial intelligence as critical priorities for economic policy.