FRANKFURT, Germany (AP) — Recession continues to disrupt energy supplies from the Middle East iran war The Organization for Economic Co-operation and Development said in a report on Wednesday that it would plunge some countries into recession, raise inflation and unemployment, and deal a severe blow to the global economy.
The hardest hit will be Asian economies that rely on crude oil, fuel and natural gas from the Persian Gulf, whose supplies have been severely disrupted by the closure of the Strait of Hormuz due to the risk of an Iranian attack. Poorer countries, where people spend much of their income on fuel and food, will also be severely affected, the OECD said.
However, the effects of rising energy prices and inflation will be felt around the world. Global economic growth will fall to levels never seen before, barring major setbacks such as the coronavirus pandemic, the global financial crisis, and the recession of the late 2000s. Under the OECD’s prolonged disruption scenario, global growth would slow from 3.4% last year to 2.1% this year and 1.8% in 2027, potentially pushing some economies into or near recession.
An alternative OECD scenario, which assumes a timed disruption in which energy production and shipments from the Gulf region begin to return to pre-war levels in the middle of this year, would see growth slow to 2.8% this year and recover to 3.1% next year.
OECD Secretary-General Matthias Cormann said: “The global economy entered 2026 with strong momentum, but the outlook has deteriorated significantly since the start of the Middle East conflict, and its effects will continue for some time.” “The longer the disruption lasts, the greater the economic and social costs will be.”
Mr Cormann warned that government spending aimed at reducing energy costs needs to be directed to those most in need and temporary, to avoid excessive government debt growth and maintain incentives to conserve energy.
Despite repeated acts of violence, declared a ceasefire The war between the United States and Iran officially continues. However, continuing risks to shipping mean that traffic through the Strait of Hormuz has fallen by more than 90% compared to pre-war levels, to just a trickle. This disrupted approximately one-fifth of the world’s supply of crude oil, fuel products, and natural gas.
The OECD’s report follows a United Nations study that warned that rising energy prices will affect nearly a billion people in poor and small island countries who rely on imported fuels, forcing them to make trade-offs between paying their energy bills and investing in essential public services. More than 30% of people in these countries already live below the extreme poverty line, defined as living on less than $3 a day.
The OECD is an international intergovernmental organization and policy forum of 38 market-based democracies headquartered in Paris.
