OECD cuts Turkish economic growth forecast to lowest rate since 2020 amid Iran war, rising prices

The organization, which published its latest economic outlook under the title “Navigating Successive Shocks,” also lowered Turkey’s 2027 growth forecast to 3.6%.

The Organization for Economic Co-operation and Development (OECD) cut its forecast for Turkey’s economic growth in 2026 to just 2.7% on Thursday, below the 3% threshold and the country’s lowest growth rate since 2020, as the economic fallout from the war in Iran and rising energy and fertilizer prices weigh on the outlook.

The organization, which published its latest economic outlook under the title “Navigating Successive Shocks,” also lowered Turkey’s 2027 growth forecast to 3.6%. In its previous forecast, the OECD had projected growth of 3.1% in 2026 and 3.8% in 2027.

Despite pressure from energy and fertilizer prices, the OECD expects Turkey’s disinflation process to continue, with inflation projected at 31.5% in 2026 and 24.7% in 2027. At the same time, monetary policy easing in emerging economies such as Turkey and Brazil is expected to support economic growth.

Globally, the organization slightly raised its 2026 economic growth forecast to 2.9%, up 0.1 percentage points from its June projection, after the global economy expanded by 3.4% in 2025.

Global economies remain strong despite Middle East conflicts

Although growth slowed in the first half of the year, many economies remained resilient despite geopolitical risks in the Middle East, while the growing strength of artificial intelligence continued to support investment, manufacturing, and trade.

The US economy is projected to grow by 2.2% in 2026 and 2.1% in 2027. The eurozone is expected to grow by just 1% in each of those years, while China’s economy is forecast to expand by 4.5% in 2026 and 4.2% in 2027.

India is expected to post the highest growth rate this year, at 7.8%, followed by Indonesia at 5.2%. Saudi Arabia, by contrast, is projected to record the sharpest contraction, shrinking by 1.8% following a decline in oil production and exports against the backdrop of the war in the Middle East.

The OECD warned that the global economic outlook depends largely on reaching a sustainable resolution to the war in the Middle East. Production bottlenecks have increased refinery margins and put pressure on consumer prices.

At the same time, energy and agricultural commodity prices have remained high, partly because of supply disruptions linked to extreme weather.

The organization said significant uncertainty continues to hang over its forecasts, particularly in energy markets. Global inflation is expected to accelerate in the short term before moderating in 2027. While a rapid normalization could ease pressure on the economy, further prolonged disruptions could push prices higher and constrain economic growth.