GLOBAL ECONOMY — The United Nations on Tuesday lowered its forecast for global economic growth, projecting that gross domestic product would expand 2.5 percent in 2026 and 2.8 percent in 2027. The revised outlook, published by the UN's Department of Economic and Social Affairs, marked a downgrade from the agency's January forecast of 2.7 percent growth in 2026 and 2.9 percent in 2027.

The economic division cited rising energy prices linked to the closure of the Strait of Hormuz and volatility in financial markets as reasons for the downgrade. Shantanu Mukherjee, director of economic analysis at the Department of Economic and Social Affairs, said forecasts assumed oil prices would begin easing in the second half of the year and that governments would mitigate some of the shock by tapping fuel reserves. In an adverse scenario, he said, global growth could slow to just 2.1 percent.

"What began as a 'blow to energy markets' when the United States and Israel started the war on February 28 had turned into a 'broader supply shock of uncertain scope, magnitude and duration that is rippling across the world'," Mukherjee said.

"Our numbers right now are coming with a significant amount of uncertainty. And uncertainty in and of itself is a significant drag on the economy," he said.

Developing countries' growth this year is expected to be 1.3 percentage points below the pre-pandemic average, compared with a 0.7 percentage-point decline for the global economy as a whole. Western Asia's growth forecast for 2026 was cut from 4.1 percent to 1.4 percent. The Caribbean, West Africa, Central Africa, South-Eastern Europe and the United Kingdom had their growth forecasts for this year cut by 0.4 to 0.5 percentage points. Outlooks for the U.S. and China were unchanged at projected growth of 2 percent and 4.6 percent, respectively.

The war has been paused since the U.S. and Iran agreed to a truce on April 8. Shipping remains at a practical standstill in the Strait of Hormuz under the threat of Iranian attacks. On Monday, ten commercial ships transited the strait, compared with roughly 130 vessels crossing daily before the war, according to the maritime intelligence firm Windward.

The International Monetary Fund cut its global growth forecast in April from 3.3 percent to 3.1 percent. The UN forecast projects lower global growth than the IMF's revised figure for both 2026 and 2027.