OECD, “Under Pressure” theme within the scope of the OECD Ministerial Council Meeting held on June 3-4, published its Economic Outlook report. According to the report, the USA/Israel-Iran War tests the resilience of the global economy, while uncertainties about the duration and scale of the war continue. It is estimated that even after the end…
OECD, “Under Pressure” theme within the scope of the OECD Ministerial Council Meeting held on June 3-4, published its Economic Outlook report. According to the report, the USA/Israel-Iran War tests the resilience of the global economy, while uncertainties about the duration and scale of the war continue. It is estimated that even after the end of the war, the reconstruction of damaged infrastructure and transportation routes, and the return to normalcy of the global supply chain may take months, leading to continued economic pressure for some time. Particularly in Gulf countries, the significant disruption in prices of oil, liquefied natural gas (LNG), agricultural, and industrial inputs is expected to create upward pressure on inflation in many countries, with many Asian economies being among the most directly exposed to current and potential shocks due to their dependence on imports from the Middle East.
Due to the extraordinary uncertain situation, OECD has presented two scenarios in its report on how the global economy could evolve in the next 18 months. These scenarios largely depend on the course of the energy crisis, how long it will take to find a permanent solution to the conflict, and the policy measures to be taken as a result. In the “limited disruption” scenario where the disruptions caused by the war are significantly felt but relatively short-lived, it is assumed that energy production and trade in Gulf economies will gradually return to normal from the third quarter of this year, and limited energy supply constraints will be experienced especially in Asian economies. According to this scenario, it is estimated that the global economic growth, which was 3.4% in 2025, will slow down to 2.8% this year and is expected to rise again to 3.1% in 2027. OECD had forecasted in its report in March that the global economy would grow by 2.9% this year and by 3% in 2027. It is anticipated in the scenario that policy rates will be stable in most major economies this year and basic price pressures will remain limited. These pressures are expected to ease by 2027. In G20 countries, inflation is projected to rise from 3.4% in 2025 to 4% this year and slow down to 3.1% in 2027. If a permanent ceasefire is achieved in the war and further decreases occur in energy prices, a slightly higher global economic growth is expected. In this context, it is foreseen that an additional 10% drop in prices of oil, gas, and fertilizers in the second half of the year will increase the global economic growth by 0.1 points in 2027 and lead to a 0.3-point decrease in inflation.
Long-term uncertainty could further suppress growth. In the “prolonged disruption” scenario, in case peace cannot be achieved until the later periods of 2027, OECD assumes that the current disruptions in energy production and exports in Gulf economies will continue until the second half of 2027 and then gradually decrease based on the potential costs that may arise. According to this scenario, there is a high probability of severe shortages in energy products, agricultural, and industrial products produced by Gulf countries, and it is evaluated that this situation may have lasting effects on potential production through productivity decline and decreasing investments. In this context, it is estimated that global economic growth will decline to 2.1% this year and to 1.8% in 2027, and the slowdown could push many economies into recession and increase unemployment. In the scenario, it is anticipated that global inflation could increase by 0.4 points this year and by 1.3 points in 2027, and policy rates could be increased by 50-75 basis points in many countries. Turkey’s economy is expected to grow by 3.1% this year According to OECD’s forecast, the Turkish economy will grow by 3.1% this year and by 3.8% in 2027. The organization had predicted in its report in March that the growth in the Turkish economy would be 3.3% this year and 3.8% in 2027. While it is foreseen that high energy and commodity prices could suppress Turkey’s domestic demand under tight financial conditions, it is expected that the improvement in consumer confidence towards the end of this year and the expected decrease in interest rates will support the strengthening of consumption and investments. With the continuation of the disinflation process, it is expected that annual inflation in Turkey will fall below 20% in the first half of 2027, but the escalation of tension in the Middle East and possible price pressures are considered as a significant risk for the slowdown in inflation. It is considered crucial to continue the tight monetary policy to reduce inflation expectations, and it is emphasized that future interest rate hikes should not be overlooked. According to OECD, despite being affected by rising energy prices, Turkey is in a relatively safer position compared to many countries in direct supply risks as most of its imports of oil, natural gas, and fertilizers do not come from the Persian Gulf. On the other hand, the Turkish economy maintains sensitivity to demand stagnation in Europe and particularly the dominance of China in third markets, especially in the manufacturing sector.
