OECD says AI spending boom is cushioning the global economy from the Middle East energy shock as 2027 outlook is cut
Key Takeaways
- •The OECD raised its 202 global growth forecast to 2.9% from 2.8%, while lowering the 2027 projection to 3.0% from 3.1% because of the Middle East conflict's impact on commodity prices.
- •Corporate investment in data centers, semiconductors, and AI infrastructure, supported by Japanese and South Korean technology exports, has helped sustain US growth, now projected at 2.2% in 2026 and 2.1% in 2027.
- •Canada received the largest downgrade, with its 2026 growth forecast cut to 0.9% from 1.2%, following new US tariffs on Canadian goods.
- •G20 inflation projections were increased to 4.1% for 2026 and 3.6% for 2027, with European gas storage sitting at 15-year lows entering the winter heating season.
- •The OECD warned that simultaneous downside risks, including energy market turmoil, rising government bond yields, weak AI investment returns, and the strongest El Niño in 1,000 years, could reduce 2027 growth by 0.7 percentage points and lift inflation by 1.1 points.
The Organisation for Economic Co-operation and Development (OECD) said on Wednesday that a wave of corporate spending on artificial intelligence has offset part of the damage the Middle East energy shock would otherwise have inflicted on the global economy this year.
The capital has poured into data centers, semiconductors, and other AI infrastructure, with stronger technology exports from Japan and South Korea feeding into expanding activity in the United States. Even so, the Paris-based organization's interim outlook, also released on Wednesday, cut its growth targets for 2027 — echoing the more cautious path it had earlier projected for 2026 before this year turned out better than expected.
2026 beats expectations, 2027 gets a downgrade
The OECD now expects global output to expand 2.9% in 2026, an upgrade from the 2.8% it forecast as recently as June. Even with the improvement, the projection remains short of the 3.4% the global economy recorded last year.
The organization does not expect the same resilience in 2027, trimming its 3.1% forecast to 3.0% and tying the downgrade to the Middle East conflict's impact on commodity prices. The split captures the report's core message: the AI spending wave bought the global economy a stronger 2026, while the conflict's commodity-price fallout lands on 2027.
AI spending is separating winners from losers
The gains have not been evenly distributed, with outcomes diverging along the lines of AI exposure and vulnerability to energy costs. That cross-border trade circuit — Korean and Japanese technology exports feeding US data center construction — explains how a single investment theme shows up in growth numbers on both sides of the Pacific.
The United States, the biggest winner, received an upgrade to June's numbers, with the OECD now projecting 2.2% growth in 2026 and 2.1% in 2027. The expansion is riding on corporate AI capital spending, even as slowing household demand under tariffs and pricier energy create speed bumps.
North of the border, Canada took the largest downgrade over new US tariffs on Canadian goods. The OECD cut its 2026 forecast to 0.9% from 1.2%, and its 2027 forecast likewise fell, to 1.3% from 1.7%.
China's projections were held at 4.5% this year and 4.2% in 2027, unchanged from June, as investment has been throttled while the country works to trim excess industrial capacity.
Eurozone growth remains stuck at 1.0% in both this year and next, with high gas prices and interest rates offsetting new defense outlays. Japan is expected to grow 0.8% in 2026 and 0.7% in 2027.
The energy shock is feeding back into prices
Inflation is the channel the OECD watches most closely. Across the G20, it now sees consumer prices rising 4.1% in 2026, a touch above June's 4.0%, and marked its 2027 call up more sharply to 3.6% from 3.1%.
In the eurozone, where European gas storage sits at 15-year lows heading into winter — leaving unusually thin buffers for the heating season — inflation is projected at 3.0% this year and 2.9% in 2027. US inflation is seen at 3.6% in 2026 before cooling to 2.6%.
A separate assessment released a day earlier, on Tuesday, tells a gloomier version of the same story. The UN Department of Economic and Social Affairs put global growth at just 2.6% in 2026 and 2.9% in 2027, and noted that Brent crude has climbed roughly 40% since February to around $100 a barrel. Like the OECD, it credited strong demand for AI-related technology with keeping investment and trade afloat, citing merchandise trade growth of 5.4% in the first five months of the year, led by semiconductors and electronics, per UNCTAD data.
A cluster of downside risks
The OECD laid out a cluster of risks that, if they struck together, could subtract 0.7 percentage points from 2027 growth and add 1.1 points to inflation. The list includes fresh turmoil in energy markets, surging government bond yields, weak returns on AI investment, and extreme weather from an El Niño the organization called the strongest in 1,000 years and a “significant downside risk” to food supply. Each item also doubles as a marker to watch through the rest of the year: energy price swings, government borrowing costs, the payoff on AI capital outlays, and El Niño's impact on harvests.
The last item on AI matters for markets that have leaned hard on the technology theme. A loss of confidence in AI company valuations, the OECD warned, ranks among the events that could stall the global expansion. Given how closely crypto and AI-linked equities have tracked the same optimism, that warning lands on both markets at once: Bitcoin hit an eight-month high above $86,000 on Monday alongside record closes for the Nasdaq, as Cryptopolitan reported.
