World Economy: Growth or Recession?

The primary cause of the slowdown is, without doubt, geopolitical tensions in the Persian Gulf, supply disruptions for oil and gas from the region, and the resulting high volatility in energy prices. According to Morgan Stanley Research, global economic growth in 2026 will reach 3.2%, but is expected to recover to 3.4% the following year if positive developments continue and the conflict ends swiftly.

The assessment from International Monetary Fund specialists is even more cautious: assuming the conflict remains limited in duration and scale, they forecast a slowdown in global growth to 3.1% in 2026 and 3.2% in 2027.

Experts note that a prolonged conflict could lead to energy shortages, worsening supply chain disruptions, a sharp rise in inflation, and an erosion of consumer and business confidence, as well as oil prices exceeding $150 per barrel. Such a scenario carries the risk of a global recession.

Experts have expressed concern about rising inflation driven by higher energy prices and tariffs. This is particularly relevant for countries on the European continent. Europe, as is well known, is more exposed to the impact of rising oil and liquefied natural gas prices due to supply disruptions in the Middle East.

According to Morgan Stanley Research estimates, headline inflation in Europe could peak with the onset of winter, while core inflation may remain above target for most of 2027. In this context, specialists believe the European Central Bank will tighten policy in the second half of the current year, raising rates twice by 25 basis points.

As the primary driver of global economic growth, experts across all international organizations point above all to rising investment in artificial intelligence, with particular emphasis on growing capital expenditure in data centers and their infrastructure.

Nevertheless, very high risks persist in the global economy, which specialists attribute to a high degree of uncertainty that makes building adequate medium- and long-term forecasts increasingly difficult. At the current stage of development, the world has become hostage to geopolitical shocks and the rivalry between the world's major powers. Only a sound and balanced assessment of risks and opportunities, combined with a carefully calibrated foreign policy approach by the leaders of the world's major economies, can bring the world to a state of equilibrium and dynamic development.

Author: Candidate of Economic Sciences, Associate Professor, Department of World Economy and World Finance, Financial University under the Government of the Russian Federation — Natalya Vladimirovna Sergeyeva.