PARIS, FRANCE / RankWire.AI / – OECD has upgraded its forecast for global expansion in 2026 to 2.9%, citing the resilience of the world economy beyond expectations. This marks an increase from the 2.8% forecast issued in June. Conversely, the organization lowered its 2027 growth projection to 3.0% from 3.1%. Continued robust investment in artificial intelligence has played a key role in supporting production, trade, and overall economic activity. Nonetheless, rising energy costs and inflationary pressures persisted across major economies.
The OECD’s September Interim Economic Outlook highlighted a slowdown in global growth during the first half of 2026. The annualized rate declined to 2.6%, down from 3.6% during the latter half of 2025. Despite this, economic activity in many energy-importing and exporting nations remained stronger than anticipated. Factors such as oil inventories, additional output outside the Gulf, and alternative supply routes helped mitigate the energy shock. Additionally, decreased oil demand from China contributed to balancing global energy markets.
Technology investment continues to serve as a vital pillar supporting economic growth, according to the OECD. Sharp increases in semiconductor exports from Korea and Japan, along with stronger technology exports from China, underscored this trend. Industrial production tied to technology experienced rapid growth across much of Asia, while similar gains were observed in the United States and various European countries. Consumer confidence improved in advanced economies after May, with many nations maintaining low unemployment rates. However, elevated fuel prices continue to exert downward pressure on household purchasing power.
US economic growth gains momentum as euro area remains sluggish
OECD forecasts US GDP will expand by 2.2% in 2026 and 2.1% in 2027. AI-related investments bolster the economy, even as slower consumer spending and stagnant real incomes limit overall growth. The euro area is expected to see its GDP rise by 1.0% in both years, weighed down by rising energy prices and interest rates. Japan’s economy is projected to grow by 0.8% in 2026, with a slight slowdown to 0.7% in 2027.
China’s economy is anticipated to grow by 4.5% in 2026 before decelerating to 4.2% in 2027. India is expected to expand by 7.1% in the 2026-27 fiscal year, following a 7.8% increase in the previous year. Growth projections for India in the 2027-28 fiscal year stand at 6.5%. Indonesia’s economy is forecasted to grow 5.2% in 2026 and 5.1% in 2027. Mexico’s economy is set to expand by 1.5% this year and 1.8% next year.
Energy-driven inflation causes price pressures across G20 economies
Inflation continues to be a key concern within the OECD outlook. The G20 countries are projected to have a headline inflation rate of 4.1% in 2026, rising from 3.4% in 2025. This is expected to ease back to 3.6% in 2027. The advanced economies within the G20 are forecasted to have inflation of 3.2% this year and 2.6% next year. The United States’ inflation rate is predicted to decline from 3.6% in 2026 to 2.6% in 2027. Inflation in the euro area is anticipated at 3.0% and 2.9%, respectively.
The OECD reports that rising energy prices have heightened household expenses and revived inflationary pressures across numerous economies. Meanwhile, long-term government bond yields have increased as public borrowing costs and debt service payments rise. OECD Secretary-General Mathias Cormann stated that global growth had held up better than initially expected, though the economy remains weaker compared to last year. The organization advocates for targeted, short-term support measures, sustainable public finances, and enhanced long-term productivity. It also calls on governments to expand workforce skills, diversify energy sources, and promote wider adoption of artificial intelligence.