OECD: Global Economy Under Pressure – Geopolitics, Energy and Impacts on Czechia
The Organisation for Economic Co-operation and Development (OECD) has released its first Economic Outlook of the year, providing a forecast through the end of 2026 and into the near future.
In its report, the OECD confirms that the main factor shaping the current global economic outlook is the ongoing conflict in the Middle East. Although recent news reports indicate an agreement between the United States and Iran, the situation significantly increases uncertainty, affects energy prices and trade flows, and forces governments and businesses to reassess their strategies.
The OECD works with two scenarios for the impact on the global economy. In the case of a “time-limited disruption”, global growth would slow from 3.4% in 2025 to 2.8% in 2026 and then slightly recover. In contrast, the “prolonged disruption” scenario assumes a significantly weaker performance of the global economy, with growth potentially falling to 2.1% in 2026 and further to 1.8% in 2027. This negative scenario would have particularly strong impacts on energy-dependent economies, Europe, and emerging markets.
Energy and food prices remain the key issue. Higher costs feed into inflation, weaken household purchasing power, and increase costs for firms. The OECD also points to secondary effects, such as the risk of inflation expectations becoming unanchored or disruptions to supply chains in sensitive sectors, including the technology sector and semiconductor manufacturing. Higher energy prices may also increase the operating costs of data centres and slow the development of AI infrastructure.
In addition, uncertainty persists in international trade. The OECD emphasizes that further fragmentation and rising trade barriers would worsen the situation, while trade liberalisation could, on the contrary, support growth and living standards. At the same time, it warns against the introduction of export restrictions, especially for strategic commodities.
The OECD report provides clear recommendations for economic policy. Monetary policy must remain vigilant regarding inflation, fiscal support should be targeted and temporary, and a key priority is strengthening energy security through diversification of sources and higher efficiency. Structural reforms should increase the resilience of economies to external shocks.
Impacts on the Czech economy
According to the OECD, the Czech economy is currently experiencing slowing but still relatively stable growth. GDP growth is expected to reach 1.9% in 2026 and to slightly accelerate to 2.1% in 2027. The main drag remains the decline in real household income due to higher energy and food prices, which dampens consumption.
Short-term developments at the beginning of 2026 show weaker dynamics, with quarter-on-quarter GDP growth reaching only 0.2%. Domestic demand supports the economy, but foreign trade has a negative impact. Consumer and industrial confidence remains volatile, although there are partial positive signals, such as a recovery in car production, including electromobility.
Inflation is slightly accelerating again, mainly due to energy prices, and remains a problem particularly in the services sector. The labour market is gradually cooling, but unemployment at around 3% remains among the lowest in the OECD, and wage growth pressures persist.
From a policy perspective, the situation is mixed according to the OECD. Monetary policy remains slightly restrictive, while fiscal policy is expected to be rather expansionary in 2026, partly due to investment and the use of European funds. These also support investment activity, which should remain relatively strong at least until the end of 2026.
A specific feature of Czechia is its relatively low direct dependence on energy supplies from the Middle East; nevertheless, the economy remains sensitive to global price shocks. Recent government measures, such as the release of part of oil reserves or interventions in fuel prices, illustrate efforts to mitigate immediate impacts.
Risks and structural challenges
According to the OECD, risks to future developments remain. The greatest threat continues to be an escalation of the conflict in the Middle East, along with related disruptions to supply chains and rising energy prices. For the export-oriented and energy-intensive Czech economy, this would mean a significant slowdown.
In addition to short-term risks, the OECD also highlights the need for structural changes. Key priorities include better targeting of energy support so as not to weaken incentives to save energy, accelerating the deployment of renewable energy sources and simplifying permitting processes, strengthening innovation capacity, particularly among small and young firms, and fully implementing pension reform to ensure long-term fiscal sustainability.
For Czech industry, current developments thus confirm the need to combine short-term crisis management with long-term transformation. Energy security, diversification, and innovation are becoming not only environmental but above all economic priorities.