PARIS, FRANCE / RankWire.AI / – The OECD has increased its projection for worldwide economic expansion in 2026 to 2.9%, citing increased resilience across global markets. This adjustment reflects an upward revision from the 2.8% forecast presented in June. Meanwhile, the organization has lowered its growth outlook for 2027 to 3.0% from the previous 3.1%. Continued investment in artificial intelligence remains a key driver supporting economic activity and trade. However, inflation and rising energy prices continue to exert pressure on households and businesses in major economies.
Despite performing better than earlier expectations, global growth decelerated in the first half of 2026. The annualized growth rate declined to 2.6%, compared to 3.6% in the second half of 2025. The stabilization of energy markets was aided by oil inventories and increased production outside the Gulf region. Additionally, alternative routes of supply helped ensure fuel availability to international markets. China’s reduced oil demand also contributed to offsetting higher prices as nations adapted to shifting supply conditions and elevated costs.
Technology expenditure continues to bolster manufacturing and exports. Shipments of semiconductors experienced strong growth in Korea and Japan, and China also reported gains in technology exports. Industrial output related to technology expanded across much of Asia. Similar investments supported activity in the United States and parts of Europe. Consumer confidence improved in several developed economies following May, while unemployment levels remained low in many countries. Nonetheless, higher fuel costs have persisted in diminishing household purchasing power.
US Economy Tops Growth Forecasts for Major Advanced Markets
The United States economy is projected to grow 2.2% in 2026 and 2.1% in 2027. Ongoing investment in artificial intelligence continues to underpin business activity, although overall growth is tempered by slower consumer spending. The euro area is expected to expand by 1.0% in both years. Elevated energy prices and higher interest rates continue to dampen regional demand. Japan is forecast to see a 0.8% increase in 2026, with growth easing to 0.7% in 2027.
China’s growth is anticipated to reach 4.5% in 2026 and 4.2% in 2027. India is predicted to expand by 7.1% in fiscal year 2026-27 after a growth rate of 7.8% in the previous fiscal year. For fiscal year 2027-28, its economy is forecast to grow 6.5%. Indonesia is expected to record 5.2% growth in 2026 and 5.1% in 2027. Mexico’s economy is projected to grow 1.5% this year and 1.8% next year.
Energy Costs Push G20 Inflation to Elevated Levels
Inflation remains a prominent concern within the OECD outlook. G20 nations are expected to see headline inflation of 4.1% in 2026, an increase from 3.4% in 2025. The rate is projected to decrease to 3.6% in 2027. The advanced economies within the G20 are forecast to experience inflation of 3.2% this year and 2.6% in 2027. Specifically, US inflation is predicted to fall from 3.6% in 2026 to 2.6% in 2027. Inflation in the euro area is expected to be 3.0% and 2.9%, respectively.
The OECD indicated that higher energy prices have driven up household costs and intensified inflationary pressures across many economies. Additionally, long-term government bond yields have increased, reflecting higher borrowing and debt servicing expenses. OECD Secretary-General Mathias Cormann remarked that global growth had demonstrated better resilience than anticipated, yet remained weaker than last year. The organization emphasized the importance of sustainable public finances and targeted short-term support. It also highlighted the significance of productivity, skills development, diversified energy sources, and wider adoption of artificial intelligence as critical areas for economic policy advancement.