The global economy is facing higher inflation and weaker growth in the wake of the war in Iran, according to new forecasts from the Organisation for Economic Co-operation and Development (OECD).

In its latest outlook, the OECD has downgraded GDP growth projections for most major economies – including Spain – while raising inflation expectations, warning that the impact of rising energy prices is already being felt.

Spain’s economy is now expected to grow by 2.1% in 2026, a slight downgrade from previous estimates and a notable slowdown from 2025. Growth is projected to fall further to 1.7% by 2027.

At the same time, inflation is set to rise, with experts putting the rate in March at 3.3%, significantly above earlier projections and after an average inflation of 2.7% in 2025.

By 2027, inflation could ease to 2.2%, though still higher than previously predicted.

Spain is set to continue outperforming major eurozone economies such as Germany, France and Italy in terms of growth, but at the cost of higher inflation.

The main driver behind the bleaker outlook is the surge in energy prices since the outbreak of war on February 28.

The OECD warns that if oil prices remain above $100 per barrel and European gas prices stay elevated, businesses will face significantly higher costs, which will feed through to consumer prices and dampen demand.

The organisation assumes the energy shock will begin to ease from mid-2026, meaning inflation pressures could peak in the second quarter of next year, but it stresses that uncertainty remains high.

The OECD also warned that medium-term inflation expectations are already rising, urging central banks to remain ‘vigilant’ to prevent inflation from becoming entrenched.