The global economy is heading toward one of its weakest performances since the 2008 financial crisis, according to a new assessment from the United Nations, which cites the ongoing Middle East conflict and rising energy prices as key pressures weighing on growth and inflation worldwide.
UN economists have downgraded global GDP growth to 2.5% for 2026, down from a January forecast of 2.7%. In a more severe scenario, growth could slip further to 2.1%, a level described by UN officials as among the weakest outside the pandemic and the global financial crisis.
Shantanu Mukherjee, director of economic analysis in the UN Department of Economic and Social Affairs, said the world is not currently heading into recession, but warned that economic conditions are deteriorating for many countries. He noted that higher energy costs are a central factor behind the downturn.
Global inflation is now expected to reach 3.9% this year, an upward revision of 0.8 percentage points since January. The UN linked the increase to disruptions in oil supply and trade routes following air strikes on Iran by the United States and Israel, and Iran’s subsequent move to restrict access through the Strait of Hormuz, a key global shipping corridor.
Mukherjee said the impact of rising energy prices is spreading across industries, raising costs for transport, manufacturing and consumer goods.
Inflation pressures are expected to vary sharply by region. In advanced economies, inflation is forecast to rise from 2.6% in 2025 to 2.9% in 2026. In developing economies, it is expected to climb from 4.2% to 5.2%, with higher import and fuel costs eroding household incomes.
The UN report highlights the uneven economic impact of the conflict. West Asia, a region covering 21 Arab states including Gulf economies, is expected to be the hardest hit, with growth projected to fall from 3.6% in 2025 to 1.4% in 2026. The report attributes the slowdown to energy shocks, damage to infrastructure, and disruptions to oil production, trade and tourism.
Other regions are also expected to slow. Growth in Africa is forecast to ease from 4.2% to 3.9%, while Latin America and the Caribbean are expected to slip from 2.5% to 2.3%. The United States is projected to remain relatively stable with 2% growth.
Europe is among the most exposed regions due to its reliance on imported energy. Growth in the European Union is expected to decline from 1.5% to 1.1%, while the United Kingdom is forecast to slow from 1.4% to 0.7%.
By contrast, Asia shows more resilience. China’s growth is projected to ease slightly to 4.6%, supported by reserves and policy support, while India is forecast to expand by 6.4%, remaining one of the fastest-growing major economies.
Senior UN economist Ingo Pitterle said countries with buffers may delay the worst effects, but warned that those protections are limited if the conflict persists.
