Published on: 2026-05-19
Source: United Nations – United Nations –
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The crisis in the Middle East dealt a powerful blow to the global economy, causing a slowdown in growth rates, accelerating inflation, and increasing levels of uncertainty. This is stated in a report published on Tuesday by the UN Department of Economic and Social Affairs.
According to forecasts, global GDP growth in 2026 will be 2.5 percent, which is 0.2 percent lower than the January estimates and significantly below the pandemic levels. The revision of the forecast downwards indicates a further weakening and without restrained prospects for the global economy.
Due to the conflict in the Middle East, the global trend of slowing inflation observed since 2023 has paused. According to forecasts, in developed economies the inflation rate will increase from 2.6 percent in 2025 to 2.9 percent in 2026.
In a country with a developing economy, inflation will accelerate from 4.2 to 5.2 percent, as the growth of prices for energy carriers, transport, and imported goods undermines real household incomes and intensifies price pressure across a wide range of product categories.
Experts are particularly concerned about food prices. Disruptions in the supply of fertilizers have led to increased production costs, which may result in reduced crop yields and, consequently, exert upward pressure on food prices.
Global financial markets are still demonstrating stability, having absorbed the initial shock. Nevertheless, the rise in energy prices led to an increase in inflation expectations, which, in turn, triggered growth in short-term bond yields. For developing countries, this resulted in a tightening of external financing conditions and a weakening of budgetary and financial positions.
“The crisis in the Middle East has exacerbated tensions in the economies of developing countries,” said Li Qunxua, Deputy Secretary-General of the United Nations for Economic and Social Affairs.
Large-scale slowdown with uneven regional consequences
The impact of the crisis on countries and regions is extremely uneven: the most serious damage has been inflicted on the countries of Western Asia. According to forecasts, growth rates in this region will sharply decline – from 3.6 percent in 2025 to 1.4 in 2026. This is due not only to the energy shock but also to disruptions in oil production, trade, and the tourism sector.
In other regions, the situation is quite heterogeneous. It is expected that the United States will experience relative stability: the projected economic growth in 2026 will be 2.0 percent.
Europe, on the contrary, turned out to be more vulnerable: a strong dependence on imported energy carriers creates a serious burden both on the population and on business. According to forecasts, growth rates in the European Union will slow down from 1.5 percent in 2025 to 1.1 in 2026, while the United Kingdom is expected to experience a sharper decline in indicators – from 1.4 to 0.7 percent.
It is expected that China’s GDP growth will slow from 5.0 to 4.6 percent. India remains one of the fastest-growing major economies in the world: production volume here is expected to increase by 6.4 percent. The decline in this indicator compared to the 2025 level (7.5 percent) indicates the restraining influence of rising energy import costs and tightening financial conditions.
In Africa, according to forecasts, the average growth rates in 2026 will slow down slightly—from 4.2 to 3.9 percent—but behind these figures lies a deepening divide: exporters of oil and gas benefit from high prices, while importers of energy resources face increasing fiscal pressure caused by the rising cost of fuel and food.
In Latin America and the Caribbean basin, most countries have suffered less than states in other regions, yet the region still remains on a low growth trajectory: according to forecasts, in 2026 growth will slow from 2.5 to 2.3 percent.
Threats to achievements in the field of development
The conflict in the Middle East threatens to reduce progress to zero in the development area and further slow down advancement towards the Sustainable Development Goals. Price shocks undermine food security, real incomes of the population, and investments in the productive sector, increasing the risk of long-term socio-economic consequences of a negative nature.
The heaviest burden falls on families with low income levels, as the rise in prices for food and energy carriers consumes an increasingly large share of their budget, and the growth of expenses outpaces the growth of wages, which leads to worsening poverty. At the same time, governments of countries most in need of protecting vulnerable population groups have the least capability to do so.
In the ecological sphere, the rise in energy carrier prices creates a risk of a short-term return to the use of carbon-intensive types of fuel. To counteract this trend, the report talks about the need for sequential multifaceted actions, including ensuring trade openness, expanding concessional financing, and supporting structural reforms.
Other factors
In addition to the consequences of the conflict in the Middle East, the authors of the report draw attention to the weakening of economic growth catalysts in the medium term. After the global financial crisis, the global growth of labor productivity slowed down, and the current shocks risk intensifying this trend, restraining investment and trade flows.
Geopolitical fragmentation and limited fiscal space pose even greater risks to labor productivity growth. The development of artificial intelligence, experts note, contains significant potential, but it is also associated with considerable risks; meanwhile, the benefits will likely be realized by a limited number of countries.
According to the forecasts of the report’s authors, in 2027 there will begin a moderate recovery of the economy with a growth rate of 2.8 percent. It is expected that certain support for growth will be provided by a stable labor market, steady consumer demand, as well as trade and investment activity, stimulated by the development of AI.
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