Inflation in developed countries will rise to 2.9 percent, in developing countries to 5.2 percent, Western Asia’s growth will collapse from 3.6 to 1.4 percent

According to the UN report “World Economic Situation and Prospects 2026”, the global economy is under pressure. The Middle East crisis is slowing growth, reigniting inflationary pressures and increasing financial market uncertainty.

Global GDP growth is forecast at 2.5 percent for 2026. That is 0.3 percentage points lower than in 2025 and 0.2 percentage points below the January forecast. Moderate recovery to 2.8 percent is expected in 2027.

The shock is first felt in the energy sector. Limited supply, price spikes and higher transport and insurance costs are spreading through supply chains. This drives up production costs worldwide. Food prices are a particular concern. Fertilizer supply disruptions have already pushed up prices, which could reduce crop yields.

The conflict has halted the global disinflation trend that began in 2023. Inflation is projected to rise from 2.6 percent in 2025 to 2.9 percent in 2026 in developed countries, and from 4.2 to 5.2 percent in developing countries.

Strong labour markets and artificial intelligence are supporting economic activity, but cannot offset the negative factors. The toughest prospects are for fuel- and food-importing developing countries.

The impact is highly uneven. The most severe damage is in Western Asia, where growth is projected to collapse from 3.6 percent in 2025 to 1.4 percent in 2026 — due not only to the energy shock, but also to direct infrastructure damage, oil production disruptions, trade and tourism.

FAO Chief Economist Maximo Torero said the closure of the Strait of Hormuz is not a temporary shipping disruption, but the start of a systemic agrifood shock. It could trigger a serious global food price crisis within six to twelve months.

FAO warns that alternative trade routes, export restriction limits, humanitarian flow protection and buffer stocks are needed. The window for preventive action is closing fast. Decisions taken now by farmers and governments on fertiliser use, imports, financing and crop choices will determine whether a major global food crisis emerges in six to twelve months.

The world is used to crises. But this one is different. It is not in one country. It is in a strait through which a fifth of oil and a third of fertilisers pass. The UN cuts forecasts. FAO sounds the alarm. Inflation is rising again. And Western Asia’s economies are collapsing. The question is not whether the crisis will happen. It is already here. The question is how fast the world will understand that the old routes are closed. And whether it will find new ones. For now, there is no answer. Only forecasts. And they are not comforting.