UN, United Nations (2026) World Economic Situation and Prospects as of mid-2026. United Nations.
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The crisis in the Middle East has delivered yet another shock to the global economy, slowing growth, reigniting inflationary pressures and heightening uncertainty. Global GDP growth is now forecast at 2.5 per cent in 2026, 0.2 percentage points below the January projection and well below pre-pandemic norms. A modest recovery is projected at 2.8 per cent in 2027. Solid labour markets, resilient consumer demand, and AI-driven trade and investment in select economies are expected to provide some support, but the downgrade underscores a further weakening of an already subdued global outlook. The shock is primarily felt in the energy sector—through constrained supply, surging prices, and rising freight and insurance costs—with effects cascading through supply chains and increasing production costs globally. While the surge in prices delivers substantial windfall gains for energy companies, it has intensified cost pressures for households and businesses worldwide. The overall impact will depend on the duration of disruptions in energy markets, leaving the outlook highly uncertain and risks tilted to the downside. The conflict has halted the global disinflation trend underway since 2023. In developed economies, inflation is forecast to rise from 2.6 per cent in 2025 to 2.9 per cent in 2026, edging further above central bank targets in most cases. In developing economies, the uptick is sharper: inflation is projected to accelerate from 4.2 per cent to 5.2 per cent, as higher energy, transport and import costs erode real incomes and broaden price pressures across a wide range of goods. A particular concern is food prices. Fertilizer supplies have been disrupted, pushing up costs, which could reduce crop yields, exerting an upward pressure on food prices. For central banks, the increasingly uncertain inflation environment poses a dilemma: raising interest rates to contain inflation risks further weakening growth, while standing pat risks allowing price pressures to become entrenched. Global financial markets have so far remained resilient, absorbing the initial shock in broadly orderly fashion. However, higher energy prices have lifted inflation expectations, driving short term bond yields higher. For developing countries, this has tightened external financing conditions and weakened fiscal positions, particularly where policy space is already limited. “The Middle East crisis has intensified strains across developing economies,” said Li Junhua, United Nations Under Secretary General for Economic and Social Affairs. “Rising borrowing costs and renewed capital flow pressures risk deepening debt vulnerabilities and constraining the resources available for sustainable development at a critical moment.”
| Item Type: | Books |
|---|---|
| Keywords: | United Nations (UN), World Report, Economy |
| Subjects: | Right to Resources |
| Depositing User: | IPL ADMIN |
| Date Deposited: | 09 Jun 2026 10:35 |
| Last Modified: | 09 Jun 2026 10:35 |
| URI: | http://icsfarchives.net/id/eprint/22622 |
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