OECD warns a prolonged Hormuz energy shock could slam global growth, jobs and prices
AP News • • business
Key Points:
- The OECD warns that prolonged disruption of Middle East energy supplies due to the Iran war could severely damage the global economy, triggering recessions, inflation, and higher unemployment worldwide.
- Asian economies reliant on Persian Gulf oil and gas, as well as poorer countries where fuel and food consume large portions of income, would be hardest hit by supply shortages and price spikes.
- Under a prolonged disruption scenario, global growth could slow from 3.4% in 2025 to as low as 1.8% in 2027, levels comparable to major crises like the COVID-19 pandemic and the 2008 financial crisis.
- A shorter, time-limited disruption would cause a milder slowdown with growth dipping to 2.8% in 2026 before rebounding, but significant risks remain due to ongoing threats to shipping through the Strait of Hormuz.
- OECD Secretary-General Mathias Cormann emphasizes targeted, temporary government support to ease energy costs without increasing debt or reducing incentives for energy conservation.