PARIS, FRANCE / RankWire.AI / – The OECD has increased its forecast for worldwide economic expansion in 2026 to 2.9%, citing stronger resilience across global markets. This new estimate is an upward revision from the 2.8% predicted in its June report. Simultaneously, the organization has reduced its outlook for 2027 growth to 3.0% from 3.1%. Investment related to artificial intelligence continued to bolster economic activity and international trade. Nonetheless, rising energy costs and inflation remained significant challenges for households and businesses in key economies.
During the first half of 2026, global economic growth slowed, yet it outperformed earlier projections. The annualized growth rate dropped to 2.6%, compared to 3.6% in the latter half of 2025. Energy market disruptions were cushioned by increased oil inventories and higher production outside the Gulf. Additional support came from alternative supply routes that ensured steady fuel flow to global markets. Weaker oil demand from China also contributed to offsetting pressures, as nations adjusted to higher prices and shifting supply conditions.
Technology spending continued to be a key driver for manufacturing and exports. Shipments of semiconductors increased notably in Korea and Japan, while China also saw gains in technology exports. Industrial production related to technology grew across much of Asia. Similar investments supported economic activity in the United States and parts of Europe. Consumer confidence improved in several advanced economies after May. Unemployment levels remained low in many countries, although rising fuel prices continued to reduce household purchasing power.
US economy leads optimistic forecasts for advanced-market growth
The US economy is projected to grow 2.2% in 2026 and 2.1% in 2027. Continued investment in artificial intelligence supports business activities, while consumer spending slows, limiting overall growth. The euro area is expected to see a 1.0% expansion in both years. Elevated energy prices and interest rates persistently suppress regional demand. Japan’s economy is forecasted to grow 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. India’s growth is expected to be 7.1% in fiscal year 2026-27, following a 7.8% rise in the previous fiscal year. The economy is forecast to grow 6.5% in fiscal year 2027-28. Indonesia’s growth is projected at 5.2% in 2026 and 5.1% in 2027. Mexico is expected to see a 1.5% increase this year and 1.8% next year.
Inflation remains high among G20 nations amid rising energy costs
Inflation remains a central concern in the OECD outlook. The forecast for headline inflation across G20 economies is 4.1% in 2026, up from 3.4% in 2025. It is expected to decrease to 3.6% in 2027. Advanced G20 countries are projected to experience inflation of 3.2% this year and 2.6% in 2027. US inflation is forecast 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 highlighted that higher energy prices have driven up household expenses and contributed to inflationary pressures in many regions. Long-term government bond yields have also increased as borrowing and debt-servicing costs have risen. OECD Secretary-General Mathias Cormann stated that global growth had performed better than expected, although it remains weaker than last year. The organization emphasized the importance of sustainable public finances and targeted temporary support measures. It also identified productivity, skills development, diversified energy supplies, and broader adoption of artificial intelligence as critical areas for economic policy improvement.