Overview
- The OECD published its June Economic Outlook on Wednesday, June 3, cutting global growth to 2.8% for 2026 in a time‑limited scenario and warning growth could slump to 2.1% in 2026 if Gulf energy disruptions persist into next year.
- The OECD says a protracted shock would add roughly 0.4 percentage points to global inflation in 2026 and 1.3 points in 2027, which would likely prompt central banks to raise policy rates by about 50 to 75 basis points in the short term.
- Britain's Office for Budget Responsibility told ministers on Tuesday that it will revise its models to reflect stickier, second‑round inflation from the 2022 energy shock and the Iran war, a move likely to cut the Treasury's stated fiscal 'headroom' and raise projected borrowing.
- Supply stress is acute: reporting and agency analysis show tanker traffic through the Strait of Hormuz has collapsed and global oil inventories have drawn down toward critical lows, increasing price volatility and near‑term supply risk.
- Policymakers face clear tradeoffs — targeted, short‑term support for vulnerable households at the cost of higher borrowing or tighter fiscal limits — and experts urge urgent investment in grid, planning and energy diversification to reduce future shocks.