Global GDP growth is now forecast at 2.5 per cent for 2026, down from 2.7 per cent in January, and UN economists said it could fall to only 2.1 per cent "in a more adverse scenario", Australian Associated Press reported.
That would be one of the weakest growth rates this century, outside of the COVID-19 pandemic and the global financial crisis of 2008, Shantanu Mukherjee, director of economic analysis in the UN Department of Economic and Social Affairs, said at a news conference on Tuesday.
Energy prices are surging, inflation is rising and uncertainty is growing.
The ongoing conflict in the Middle East is hurting global economic growth, with developing economies being hit the hardest.
Global inflation is projected to rise to 3.9 per cent in 2026, 0.8 per cent higher than forecast in January, before the US and Israel launched a war of aggression against Iran.
That led to the blocking of the Strait of Hormuz, a critical waterway for shipments of oil, natural gas, fertilizer and other petroleum products.
"Increased energy prices are a potent factor, as are the prices of refinery products that are crucial to industrial production and commercial transport," Mukherjee said.
But he stressed that not all countries will experience the same rate of inflation.
In richer developed countries, inflation is projected to rise from 2.6 per cent in 2025 to 2.9 per cent in 2026.
In developing countries, inflation is forecast to accelerate from 4.2 per cent to 5.2 per cent as higher costs for energy, transportation and imported goods erode real incomes.