U.N. cuts global growth forecast to 2.5%, blames Middle East crisis

May 19 (Reuters) - The United Nations ‌on Tuesday ​cut its ​forecast for global economic growth, saying the Middle East crisis had reignited inflationary pressures and heightened uncertainty.

A U.N. press release summarizing the ‌mid-year update to the global body's World Economic Situation and ⁠Prospects said :

• Global GDP growth is forecast at 2.5% in 2026, compared with an estimated 3.0% in ‌2025, 0.2 percentage points below ‌the January projection and well below pre-pandemic growth rates.

• A modest recovery is projected at 2.8% in 2027.

• Solid labor markets, resilient consumer demand, and ​AI-driven trade and investment are expected to provide support, but the downgrade underscores a further weakening of a subdued global outlook.

• Surge in energy prices ⁠has delivered windfall gains for energy companies, but intensified cost pressures for households and businesses.

• In developed ​economies, inflation is forecast to rise from 2.6 % in  2025 to 2.9% in  2026 and in developing economies from 4.2% to 5.2%.

• Fertilizer ​supplies have been disrupted, pushing up costs, ‌which could reduce crop yields, putting upward pressure on food prices.

• Global financial markets have remained resilient, but inflation expectations have ⁠driven short-term bond yields higher.

• The most severe damage is in Western Asia, where growth is projected to plunge from 3.6% to 1.4%, exacerbated by damage to infrastructure, trade, ⁠and tourism.

• The United States is expected to remain comparatively resilient, with growth projected at ​2.0 % in  2026, broadly steady from  2025 on strong household demand and tech investment.

• Europe is more exposed, with reliance on imported energy straining households and businesses. EU growth is projected ‌to slow from  1.5% to 1.1% and in Britain from  1.4% to  0.7%.

• China's diversified energy mix, sizable strategic reserves, and ‌policy support are providing a buffer, with its growth projected to moderate from 5.0 % ⁠to 4.6 %.

• India's output is ‌still expected to expand by ​6.4 % against 7.5%.

• In Africa, average growth is projected to ease slightly, from 4.2% to 3.9%.

(Reporting by David Brunnstrom; Editing by ‌Sanjeev Miglani)

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