Finance

Energy supply shifts and AI activity cushion global growth

The Tip Desk · October 30, 2026 · 2 min read

Government support, additional energy supplies from outside the Gulf economies and oil-reserve drawdowns have cushioned the Middle East conflict’s effects, with AI-related activity bolstering investment, production and trade.

Global economic growth has moderated and remained resilient, supported by government assistance, additional energy supplies from outside the Gulf economies and oil-reserve drawdowns. The OECD Economic Outlook, Interim Report September 2026, identifies these measures as cushioning the adverse effects of the Middle East conflict. Strong AI-related activity has also bolstered investment, production and trade.

Governments have cushioned the conflict’s effects through discretionary support measures. Some switching to alternative commodity inputs has also softened the disruption. Together with additional energy supplies and reserve drawdowns, these adjustments have limited the conflict’s adverse economic effects. The report’s projection for more stable global growth rests partly on an assumed decline in energy prices in 2027 as energy supply recovers.

Prolonged disruption to exports from the Middle East could weaken growth, as could weather-related supply shocks associated with a very strong El Niño. The Interim Report also identifies further increases in long-term sovereign bond yields and AI investment returns that fail to meet expectations as downside risks. AI-related activity is already supporting production and trade; disappointing returns on that investment are a separate potential source of weakness.

Central banks face the ongoing energy price shock alongside above-target inflation, and the Interim Report recommends ensuring that inflation expectations remain well anchored. Government energy assistance has a specific set of conditions: support should reach those most in need, preserve incentives to reduce energy use and include clear expiry mechanisms. Fiscal pressures in many economies form part of the setting for that advice.

The report also calls for structural reforms to raise potential growth and strengthen resilience to further supply-side shocks. Governments providing immediate energy assistance should target relief, retain incentives to conserve energy and establish when support ends. The government measures cushioning growth today need clear limits on their duration.

*Source: OECD. Licensed under CC BY 4.0.*