The global economy has shown resilience, but the outlook remains clouded by trade tensions, fiscal strains and persistent uncertainty. Growth is expected to slow to 2.7% in 2026, below 2025 levels and the pre-pandemic average, as subdued investment and structural headwinds weigh on momentum despite easing inflation and monetary loosening.
Without stronger policy coordination, today’s pressures risk locking the world into a lower-growth path. Tight fiscal space, uneven disinflation and weakening multilateral cooperation are slowing progress towards the Sustainable Development Goals, particularly in developing and climate-vulnerable economies.
Key points
- Global growth is slowing and remains uneven across regions. World output is projected to slow to 2.7% in 2026 before edging up to 2.9% in 2027, still below the pre-pandemic average of 3.2%. While domestic demand and policy easing are supporting activity in the United States and parts of Asia, growth remains weak in Europe, and high debt and climate shocks continue to constrain many developing economies.
- 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.
- Inflation is easing, but the cost-of-living squeeze persists. Global headline inflation is projected to fall to 3.1% in 2026 from 3.4% in 2025. However, high prices continue to erode real incomes, particularly for low-income households, with food, energy and housing costs remaining a major source of pressure and inequality.
- Financial conditions have eased, but risks remain elevated. Lower interest rates and improved market sentiment have helped revive capital flows, but high asset valuations – particularly in AI-related sectors – and still-elevated borrowing costs continue to pose risks. Many developing economies remain constrained by heavy debt burdens and limited access to affordable finance.
Key recommendations
- Strengthen coordination across macroeconomic policies. Monetary policy alone cannot manage persistent price pressures. Better alignment between monetary, fiscal and industrial policies is essential to stabilise inflation, support investment and protect vulnerable groups.
- Use fiscal policy strategically and credibly. Targeted and temporary measures can help protect households from high prices and support social cohesion, while credible medium-term fiscal plans and prudent debt management are essential to rebuild fiscal space.
- Scale up multilateral cooperation and development finance. Implementing commitments under the Sevilla Commitment, including debt reform and expanded concessional and climate finance, is vital to closing investment gaps and reducing systemic risks.
- Reinforce an open, rules-based trading system. Strengthening transparency, predictability and cooperation in global trade remains central to sustaining growth and limiting fragmentation in an increasingly uncertain global economy.
The report was produced by the United Nations Department of Economic and Social Affairs (UN DESA), in partnership with UN Trade and Development (UNCTAD) and the five United Nations regional commissions: Economic Commission for Africa (ECA), Economic Commission for Europe (UNECE), Economic Commission for Latin America and the Caribbean (ECLAC), Economic and Social Commission for Asia and the Pacific (ESCAP) and Economic and Social Commission for Western Asia (ESCWA). The United Nations World Tourism Organization (UN Tourism) also contributed to the report.