The Organisation for Economic Co-operation and Development (OECD) offer most recent forecast for the global economy in its June Economic Outlook. In its “time-limited disruption scenario,” OECD expects the following over the next two years:
- Global growth is expected to decline from 3.4% in 2025 to 2.8% in 2026 before picking up 3.1% in 2027. Growth is expected to slow modestly in North America and Europe before a gradual recovery. Growth in the United States is projected to dip further over the period, while China moderates steadily through 2026 and 2027.
- Australia’s GDP growth is expected to slow to 1.9% in 2026, down from the pre-Middle East conflict forecast of 2.3%, partly reflecting weaker consumption growth of 1.4%. Growth is projected to drop further to 1.8% in 2027. The driver behind the slowdown is subdued consumption as inflation and mortgage rates weigh on real incomes.
- Headline inflation across G20 countries is forecast to rise from 3.4% in 2025 to 4.0% in 2026, before moderating to 3.1% in 2027 as energy costs stabilise and food price pressures reach their peak. Core inflation is anticipated to return to near-target levels in most economies by late 2027. Despite significant progress in bringing inflation under control over the past two years, central banks now face renewed pressures. This poses a policy trade-off where tighter monetary policy could restrain growth, while a more cautious approach risks persistent inflation.
- Australia’s headline is expected to rise 4.4% in 2026 due to the energy price spike, before easing back to around 2.5% in 2027 as these pressures unwind. The outlook is subject to risks that the energy supply shock could exceed expectations, or that policy actions may cause demand growth to slow more sharply than anticipated. As headline inflation was already exceeding target before the conflict and monetary policy is in a tightening phase, RBA is expected to raise rates further in response to higher inflation driven by the energy supply shock.
OECD Economic Outlook, selected countries (June 2026)
| |
|
2025 |
2026 |
2027 |
| Real GDP growth, % |
World |
3.4 |
2.8 |
3.1 |
| G20 |
3.3 |
3.0 |
3.0 |
| United States |
2.1 |
2.0 |
1.8 |
| China |
5.0 |
4.5 |
4.3 |
| Australia |
2.0 |
1.9 |
1.8 |
| Headline inflation, % |
G20 |
3.4 |
4.0 |
3.1 |
| United States |
2.6 |
3.7 |
2.1 |
| China |
-0.1 |
1.5 |
1.9 |
| Australia |
2.8 |
4.4 |
2.5 |
