The mirage of global economic resilience

By Rebeca Grynspan, Secretary-General, UN Trade and Development (UNCTAD) and Li Junhua, UN Under-Secretary-General for Economic and Social Affairs

As we enter 2026, the world economy looks remarkably resilient. According to the UN World Economic Situation and Prospects 2026, global output expanded by 2.8% in 2025 and growth is expected to ease slightly to 2.7% this year. 

For a period marked by shocks and shifting trade winds, this is no small feat. Despite rising trade frictions, elevated policy uncertainty, and persistent geopolitical tensions, international commerce has continued to expand. Consumers are still spending, labor markets remain broadly solid, and monetary easing across major economies has supported economic activity. 

Whether this resilience holds will depend less on headline growth than on the policy choices now shaping trade, finance, and investment conditions.

A fragile and uneven global economy

Yet this resilience is insufficient to ensure meaningful development progress. Beneath the headline numbers lies a global economy that is fragile, uneven, and increasingly ill‑equipped to deliver sustained and inclusive growth. The pace of economic growth – well below the pre‑pandemic average of 3.2% – is not strong enough to make up for the ground lost during successive crises. 

In vulnerable developing countries – including several classified as least developed – per‑capita income growth has been sub-par, and poverty reduction has been slow. For millions of households, the gap between headline growth and daily reality is palpable. Cost‑of‑living pressures remain elevated as prices for food, housing and essential services continue to strain household budgets. In many countries, wage gains have lagged behind expenses, eroding families’ living standards even as economies expand. 

Tightening fiscal space constrains development

Fiscal constraints are tightening across much of the world. Servicing debt now consumes a growing share of public budgets, leaving fewer resources for schools, hospitals, and climate resilience. Higher military spending adds to the squeeze, further limiting fiscal space for investment in the sectors that shape long‑term development. 

For many developing economies, high borrowing costs and volatile capital flows have made debt a pro-cyclical force, forcing adjustment precisely when investment is most needed. Declining levels of official international support – whether for humanitarian relief or development assistance – stifle prospects for the already vulnerable. 

New technologies widen old divides

Advances in artificial intelligence (AI), digital infrastructure, and clean energy technology are powerful new sources of growth, yet the benefits remain concentrated in economies with the resources and expertise to harness them. With the right policies and international cooperation, AI, digitalization, and services trade can also support diversification, create higher-quality jobs, and help countries move up value chains rather than remain commodity-dependent. 

But many developing countries lack the finance and capacity to participate, deepening gaps that could become ever harder to narrow. At the same time, the competition for critical minerals – from lithium and cobalt to rare earths – is sharpening economic rivalries and reshaping trade and industrial policy. 

Uncertainty weighs on momentum

Uncertainty, meanwhile, has become a new drag on global momentum. Trade has shown impressive resilience, supported by structural shifts – notably the rapid expansion of services trade, stronger South-South links, and trade related to investments in digitalization and AI. However, shifting rules, financial volatility, and fragmented economic blocs are undermining the confidence needed for sustained investment. 

UNCTAD’s Trade and Development Report 2025 warns that turbulence in capital markets, higher borrowing costs, and tightening trade finance are emerging as key risks to global commerce. Without more predictable and cooperative policy environments, recent resilience could easily give way to hesitation and slowdown. 

Climate emergency threatens future prosperity

On the climate front, the situation is becoming increasingly perilous. The year 2025 brought yet another record for global carbon emissions, while floods, droughts, and heatwaves inflicted mounting human and economic losses across regions. Global growth remains heavily reliant on carbon‑intensive production, which is not only unsustainable but also undermines the very foundations of future prosperity. The transition will only be credible if climate ambition is matched with access to long-term, affordable finance for adaptation and resilience.

These fault lines show why headline gross domestic product (GDP) figures cannot be the sole measure of success. Genuine resilience demands more than the capacity to withstand shocks – it requires inclusion, sustainability, and international cooperation.

Cautious optimism amid renewed momentum for cooperation

There are, nonetheless, reasons for cautious optimism. Recent multilateral agreements – the Sevilla Commitment adopted at the 4th International Conference on Financing for Development (FfD4), the outcomes of the Second World Summit for Social Development, and COP 30’s Belém Package on climate – signal renewed momentum for cooperation. They aim to strengthen the global financial safety net, expand access to affordable long‑term finance, and place decent work, equity, and environmental sustainability at the center of global policy. Ensuring that recent trade measures do not fall disproportionately on the least developed countries will be critical to making this momentum inclusive.

Whether these commitments translate into action will define the next phase of the global economy. Stability without delivery will not be enough. The real test for 2026 is to turn short-term resilience into lasting progress – anchored in sustainability, fairness, and shared opportunity for all.