OECD Expects AI Boom to Help Offset Middle East Energy Shock for Now

• AI-led investment is helping the global economy hold up marginally better than expected this year, but the ‌energy shock is becoming more entrenched, weighing on the outlook for 2027, the OECD said on Wednesday. After 3.4% growth last year, the global economy is set to slow to 2.9% growth in 2026, slightly better than the 2.8% forecast in June, the Organisation for Economic Co-operation and Development said in its interim economic outlook.
• Heading into 2027, the commodity price shock caused by the Middle East conflict is expected to weigh on momentum, and the OECD forecasts global growth picking up to only 3.0%, from 3.1% in June.
• The OECD said ⁠strong spending on AI infrastructure, from data centres to semiconductors, has been a key pillar of resilience this year, boosting growth in the United States and lifting technology exports from Japan and Korea.
• However, it warned the global outlook was particularly clouded by the potential for energy market jitters, extreme weather related to a strong El Niño, surging government bond yields and disappointing AI investment returns.
• If those risks materialised, the OECD estimated they could together reduce global growth by 0.7 percentage points next year and raise global inflation by 1.1 percentage points.
• In the OECD's baseline outlook, inflation in G20 economies was seen at 4.1% in 2026, up from 4.0% forecast in June. The OECD also raised its 2027 forecast to 3.6%, from 3.1% in June, which it said could force central banks to adjust interest rates if price pressures broaden or growth ‌falters.

(Source: Reuters)