The global economy is expected to grow relatively strongly this year, but inflation remains a concern.

This is according to the Organisation for Economic Cooperation and Development (OECD) which last week published its Interim Economic Outlook.

Global growth is forecast to hold steady at 2.9% in 2026, before edging up to 3.0% in 2027, while for the United States (US), growth is projected at 2.0% in 2026, up from an earlier estimate of 1.7%, before easing to 1.7% in 2027. The growth forecast for the United Kingdom (UK) has been revised down to 0.7% in 2026, down from 1.3%, though it is expected to recover to 1.3% in 2027. China is projected to grow at 4.4% in 2026, easing slightly to 4.3% in 2027. India’s growth estimate is revised down to 6.1% in 2026 from 6.2%, while Brazil is expected to slow to 1.5% from 1.7%. South Africa’s growth forecast is reduced to 1.2% in 2026, down from 1.3%, and expected to grow at 1.7% in 2027.

Global economic expansion remains supported by resilient artificial intelligence-driven investment, lower US tariff rates, and momentum carried over from late 2025. However, inflationary risks have intensified. Strong energy price shocks, particularly from the Middle East, have escalated inflation concerns, with oil prices rising more than 50% since December as a result of the current war between Iran, Israel, the US, and a number of Gulf states. This sharp increase has triggered ripple effects, pushing up fuel prices in Europe and Asia, and further escalating the cost of living worldwide.

Inflation is a central concern in this forecast. The OECD now expects G20 headline inflation to reach 4.0% in 2026, a significant jump from December’s 2.8%. This rise is felt acutely in both developed and emerging markets. In the US, inflation has been revised up from 3.0% to 4.2%, while the UK’s inflation estimate climbs from 2.5% to 4.0%. South Africa’s inflation forecast has also been raised to 3.9% from 3.6%, signalling future household budget pressures and a cautious South African Reserve Bank in the near term.

A primary driver of these inflationary revisions is the ongoing energy crisis, particularly the disruption of energy infrastructure and the near-total halt of shipments through the Strait of Hormuz. The OECD projects that energy prices will begin to decline gradually by mid-2026, but continued instability in the region could push inflation even higher, deepening global economic uncertainty.