The global economy is expected to expand by 2.7 percent in 2026, slightly below the 2.8 percent estimated for 2025 and well under the pre-pandemic average of 3.2 percent, according to the United Nations’ latest World Economic Situation and Prospects 2026 report.

Released by the UN Department of Economic and Social Affairs (DESA), the outlook suggests that while the world economy has shown resilience in the face of sharp trade shocks, deeper structural weaknesses continue to hold back a stronger recovery.

At the launch of the report, Navid Hanif, Assistant Secretary-General for Economic Development, said global growth held up in 2025 despite major disruptions from higher US tariffs.

“Supported by solid consumer spending and easing inflation, the global economy weathered the impact of sharp increases in US tariffs in 2025,” Hanif said. “But resilience should not be mistaken for strength.”

He warned that subdued investment and shrinking fiscal space are raising the risk that the world economy could settle into a period of persistently slower growth compared with the years before Covid-19.

Major Economies show uneven momentum

The UN expects growth in the United States to reach 2.0 percent in 2026, supported by easier monetary and fiscal conditions, though a softening labour market could limit momentum. The European Union is forecast to grow by 1.3 percent, down from 1.5 percent in 2025, as trade frictions and geopolitical uncertainty continue to weigh on exports.

In Japan, output is projected to expand by 0.9 percent, while the Commonwealth of Independent States and Georgia are expected to post growth of 2.1 percent, with the war in Ukraine still affecting economic conditions.

Across Asia, growth is expected to remain stronger than in advanced economies, though it is projected to ease. China’s economy is forecast to grow by 4.6 percent in 2026, supported by targeted policy measures. In South Asia, growth is projected at 5.6 percent, led by India’s 6.6 percent expansion, driven by resilient consumption and public investment.

In Africa, output is expected to rise by 4.0 percent, slightly higher than in 2025, although high debt levels and climate-related shocks remain key risks. Western Asia is forecast to grow by 4.1 percent, while Latin America and the Caribbean are expected to expand by 2.3 percent.

Trade resilience fading in 2026

Global trade surprised on the upside in 2025, expanding by 3.8 percent despite rising tariffs and policy uncertainty. The UN said this was partly driven by front-loaded shipments and strong growth in services trade.

However, that momentum is expected to cool in 2026, with global trade growth forecast to slow to 2.2 percent as the effects of higher tariffs and weaker demand become more visible.

Investment, meanwhile, remains weak in most regions. According to the report, geopolitical tensions and tight fiscal conditions are limiting capital spending, even though monetary easing and targeted fiscal measures have provided some support. While rapid advances in artificial intelligence have fuelled pockets of investment, the UN cautioned that the benefits are likely to be unevenly distributed.

Inflation easing, but living costs remain high

The UN expects headline inflation to continue falling, from 4.0 percent in 2024 to an estimated 3.4 percent in 2025, and down further to 3.1 percent in 2026. Yet high prices are still eroding real incomes in many countries.

Unlike the earlier phase of global inflation, price trends have become more uneven, shaped by supply bottlenecks, geopolitical risks and climate-related disruptions.

“Even as inflation recedes, high and still rising prices continue to erode the purchasing power of the most vulnerable,” said Li Junhua, UN Under-Secretary-General for Economic and Social Affairs.

Call for stronger global coordination

The UN warned that a world of trade realignments, persistent price pressures and climate shocks will require deeper cooperation at a time when geopolitical tensions and inward-looking policies are increasing.

The report highlighted the Sevilla Commitment, adopted at the Fourth International Conference on Financing for Development, as a framework for reforming the global financial system, improving debt resolution and scaling up climate and development finance.

UN Secretary-General António Guterres said many developing economies continue to struggle, leaving progress toward the Sustainable Development Goals out of reach for much of the world.

With growth stuck below pre-pandemic norms and investment still weak, the UN says the challenge for 2026 will be turning economic resilience into lasting and more inclusive expansion.