The global economy is expected to post subdued growth in 2026, weighed down by policy uncertainty, high debt levels, and lingering geopolitical tensions, according to the World Economic Situation and Prospects 2026 report released on 9 January PST by the United Nations Department of Economic and Social Affairs.

The report projects global economic growth at 2.7 percent in 2026, slightly lower than the estimated 2.8 percent in 2025 and still below pre-pandemic averages, despite easing inflation and continued monetary support in many economies.

Inflation pressures have moderated globally, but prices remain elevated, continuing to strain household purchasing power and public finances.

Uneven prospects

Developing economies face uneven prospects, with many constrained by limited fiscal space, high debt burdens, and exposure to climate-related shocks.

While some large Asian economies are expected to sustain solid growth driven by domestic demand, many low-income and vulnerable countries are projected to lag behind, falling short of growth levels needed to meet development goals.

The report also notes that global trade growth is expected to slow in 2026, following a resilient performance in 2025 that was partly driven by front-loaded shipments ahead of tariff increases. Elevated trade policy uncertainty and geopolitical fragmentation continue to pose risks to supply chains and investment flows.

Potential opportunities, despite challenges

Despite these challenges, the UN highlighted potential opportunities from technological advances, including artificial intelligence and clean energy investments, though gains remain concentrated in a few economies.

The report underscored the need for coordinated policy action to strengthen growth, manage inflation risks, and support inclusive and sustainable development as countries navigate a fragile global outlook.