Sri Lanka, May 20 -- The global economy is facing renewed pressure as the ongoing Middle East crisis weakens growth prospects, pushes inflation higher, and increases uncertainty in financial markets, according to the latest United Nations mid-year economic update.

In its report, World Economic Situation and Prospects as of mid-2026, the UN revised global GDP growth downward to 2.5% in 2026 and 2.8% in 2027, lowering its January forecast amid rising geopolitical instability.

Earlier this year, global growth was forecast to decline slightly to 2.7% in 2026 before edging up to 2.9% in 2027-remaining well below the pre-pandemic (2010-2019) average of 3.2%.

The downgrade, while moderate, reflects concerns that the duration and severity of t...