Iran War Darkens Global Growth, Ignites Inflation: OECD

This conflict, centered on Iran and the Strait of Hormuz, has pushed benchmark crude prices sharply higher, reversing disinflation progress achieved since late 2023. The OECD now projects G20 inflation at 4% for 2026, up from a previously projected 2.8%.

For Canada, real GDP growth for 2026 is downgraded to 1.2% from 1.3%, and its inflation rate is projected at 2.4%, up from 2.1%. Businesses face slower export demand, higher borrowing costs, and renewed wage pressures.

Geopolitical risks also increase for supply chains, affecting shipping insurance costs, cargo rerouting, and delays in key inputs. The OECD's projections assume the energy market disruption is temporary; a prolonged conflict means global GDP could be 0.5% lower and inflation 0.7 percentage points higher by 2027.