The global economy is projected to grow, but geopolitical tensions, trade uncertainty and weak investment continue to weigh on momentum, with high debt and persistent cost pressures posing particular challenges for developing economies.
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The global economy is expected to grow 2.7% in 2026, slightly below the 2.8% estimated for 2025 and well under the pre-pandemic average of 3.2%, according to the UN’s World Economic Situation and Prospects 2026, released on 8 January.
It finds that the world economy has shown a degree of resilience over the past year, supported by declining inflation and a gradual easing of monetary conditions in several major economies. These factors have helped sustain demand and stabilize growth amid a global environment shaped by geopolitical tensions and shifting trade policies.
The report was published by the UN Department of Economic and Social Affairs in partnership with UN Trade and Development and the five UN regional commissions, with contributions from United Nations World Tourism Organization.
Investment and fiscal constraints slow momentum
At the same time, the report cautions that underlying weaknesses continue to weigh on global momentum. Subdued investment, persistent uncertainty and constrained fiscal space in many countries raise the risk that the world could move into a period of slower and more fragile growth than before the pandemic.
For many developing economies, these conditions limit progress in job creation, income growth and longer-term development.
The report also highlights continued strains from elevated debt levels and borrowing costs, which are narrowing policy space, particularly in developing countries. While financial conditions have eased somewhat, risks remain high amid volatile capital flows, geopolitical shocks and rapid technological change that could deepen existing inequalities if left unaddressed.
Trade resilience eases as headwinds build
Trade and investment face mounting headwinds. Global trade performed better than expected in 2025, driven by early shipments ahead of higher tariffs and robust services exports. But growth is projected to slow in 2026, as temporary drivers fade and trade barriers and policy uncertainty persist. Investment remains subdued in most regions, reflecting caution among firms and tighter financing conditions.
Inflation slows, but cost pressures persist
Inflation pressures are easing globally, but challenges for households persist. According to the report, headline inflation declined from 4.0% in 2024 to an estimated 3.4% in 2025, and is projected to slow further to 3.1% in 2026.
Despite this moderation, high price levels continue to weigh on real incomes, especially for low-income households, as inflation trends become more uneven across countries and sectors.
“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.
“Ensuring that lower inflation translates into real improvements for households requires safeguarding essential spending, strengthening market competition, and tackling the structural drivers of recurring price shocks.”
Policy choices will shape the path ahead
Looking ahead, the World Economic Situation and Prospects 2026 underscores that navigating an environment of heightened uncertainty will require reducing policy unpredictability, strengthening investment conditions and reinforcing international cooperation, as countries confront slower growth, trade fragmentation and persistent development challenges.