The United Nations now expects the world economy to grow by 2.6% in 2026 and 2.9% in 2027, 0.1 percentage points above its May forecasts, while warning that higher energy prices and geopolitical tensions are again adding to inflation risks.
The September update to the UN’s World Economic Situation and Prospects report says a severe downturn has so far been avoided. Growth nevertheless remains below the 3.2% average recorded between 2010 and 2019, and the outlook varies sharply between countries.
Brent crude had risen by around 40% since February to about $100 a barrel in early September, the UN said. Diesel, jet fuel and heating-oil prices had increased even more. Those costs reach households through transport and heating bills, and companies through freight, energy and input costs.
Growth has held up better than feared
The UN said the economy had absorbed another shock after recent crises, trade tension and shrinking fiscal room. Its modest forecast upgrade signals that activity has proved more resilient than it expected in May.
The report does not describe a return to the stronger growth rates seen before the pandemic. Governments remain constrained by high debt burdens and limited budgets, while firms still face uncertainty over trade rules and energy costs.
Oil prices complicate the inflation outlook
Falling inflation had allowed many central banks to consider lower interest rates. An oil-price shock can reverse part of that progress. The direct effect is higher fuel prices, while a broader effect can emerge if transport and production costs are passed through to goods and services.
Central banks must then judge whether the rise will fade with energy prices or spread into wider price-setting and wage demands. Higher rates can contain persistent inflation, but they also raise borrowing costs for households, businesses and governments.
Risks are unevenly shared
Countries that import most of their energy are more exposed to the immediate hit from higher oil and refined-product prices. The pressure can be especially difficult where food and fuel already take up a large share of household budgets.
The UN’s update places the energy shock alongside geopolitical and trade tensions, rather than treating it as a stand-alone problem. A world economy growing at 2.6% has less room to absorb another disruption than one expanding at the pre-pandemic average.
The forecast has improved since May, but the report leaves a clear question for the months ahead: whether the energy shock remains a temporary price rise or becomes a longer drag on inflation, spending and investment.
