Global economic growth is projected to slow to 2.7% in 2026, down from an estimated 2.8% in 2025, according to a new United Nations report released Thursday.
The UN’s World Situation and Prospects study attributes the slowdown to President Donald Trump’s tariffs having a more pronounced impact and spreading geopolitical uncertainties. The report forecasts growth will rebound to 2.9% in 2027, but this remains below the pre-pandemic average of 3.2%.
The global economy has demonstrated resilience, but the outlook is clouded by trade tensions, fiscal strains and persistent uncertainty, the UN stated. Without stronger policy coordination, current pressures risk locking the world into a lower-growth path.
While domestic demand and policy easing are supporting economic activity in the United States and parts of Asia, growth remains weak in Europe. High debt levels and climate shocks continue to constrain many developing economies.
Global trade performed better than expected in 2025, driven by early shipments ahead of higher tariffs and robust services exports. However, trade growth is projected to slow in 2026 as temporary drivers fade and trade barriers persist.
The report notes that global headline inflation is expected to fall to 3.1% in 2026 from 3.4% in 2025. Despite this improvement, high prices continue to erode real incomes, particularly for low-income households, with food, energy and housing costs remaining major sources of pressure.
Financial conditions have eased with lower interest rates and improved market sentiment helping to revive capital flows. However, high asset valuations—particularly in AI-related sectors—and still-elevated borrowing costs continue to pose risks.
The UN recommends strengthening coordination across macroeconomic policies, using fiscal policy strategically, scaling up multilateral cooperation and development finance, and reinforcing an open, rules-based trading system to address these challenges.
Source: Investing