• Further slowdown expected in 2026

Sopuruchi Onwuka

Global economic growth has shown resilience over the past year despite trade tensions and geopolitical uncertainty, but remains subdued and well below pre-pandemic levels, according to a major United Nations report released on Thursday.

The World Economic Situation and Prospects 2026 report, seen by Oracle Intelligence, projects global economic growth of 2.7 per cent this year, slightly below the 2.8 per cent estimated for 2025 and far below the pre-pandemic average of 3.2 per cent.

The report notes that Africa’s growth outlook remains constrained by high debt levels and increasing climate-related shocks, even as some regions record modest improvements.

According to the UN, a sharp rise in United States tariffs created new trade frictions in 2025, though the absence of broader escalation helped limit immediate disruption to global commerce. Solid consumer spending and easing inflation helped cushion the impact, but underlying weaknesses persist.

Subdued investment, limited fiscal space and elevated macroeconomic uncertainty are weighing on economic activity, raising the risk that the global economy could settle into a slower long-term growth path than before the pandemic.

While a partial easing of trade tensions has helped stabilise global trade flows, the report warns that the full impact of higher tariffs and policy uncertainty is expected to become more evident in 2026.

Financial conditions have improved in many economies amid monetary easing and stronger consumer sentiment. However, risks remain high due to elevated asset valuations, particularly in sectors linked to rapid advances in artificial intelligence.

At the same time, high debt levels and borrowing costs continue to constrain policy options, especially in developing economies.

“A combination of economic, geopolitical and technological tensions is reshaping the global landscape, generating new uncertainty and social vulnerabilities,” UN Secretary-General António Guterres said.

He warned that many developing economies remain under severe strain, putting progress towards the Sustainable Development Goals at risk.

Regionally, economic growth in the United States is projected at 2.0 per cent in 2026, slightly higher than 1.9 per cent in 2025, supported by monetary and fiscal easing, though a softening labour market is expected to dampen momentum.

In the European Union, growth is forecast to slow to 1.3 per cent from 1.5 per cent in 2025, as higher tariffs and persistent geopolitical uncertainty weigh on exports.

East Asia is expected to grow by 4.4 per cent in 2026, down from 4.9 per cent the previous year, as the boost from front-loaded exports fades. China, the region’s largest economy, is projected to grow by 4.6 per cent, slightly below its 2025 rate, supported by targeted policy measures.

Growth in South Asia is forecast at 5.6 per cent, easing from 5.9 per cent in 2025. India is expected to lead the region with growth of 6.6 per cent, driven by resilient domestic consumption and sustained public investment.

Africa’s economic output is projected to expand by 4.0 per cent in 2026, a marginal increase from 3.9 per cent in 2025, though high debt burdens and climate-related shocks pose significant downside risks.

In Latin America and the Caribbean, growth is expected to slow slightly to 2.3 per cent from 2.4 per cent in 2025, amid moderate consumer demand and a gradual recovery in investment.

The report found that global trade expanded by a stronger-than-expected 3.8 per cent in 2025, supported by early shipment activity and robust growth in services trade. However, trade growth is projected to slow to 2.2 per cent as momentum eases.

Investment growth remains weak in most regions due to geopolitical tensions and tight fiscal conditions, although monetary easing and targeted fiscal measures have supported investment in some economies. Rapid advances in artificial intelligence have also driven pockets of strong capital spending, though the report cautions that the benefits of AI are likely to be unevenly distributed, potentially widening existing inequalities.

Inflationary pressures have eased globally, with headline inflation falling from 4.0 per cent in 2024 to an estimated 3.4 per cent in 2025, and projected to decline further to 3.1 per cent this year. However, high price levels continue to strain household purchasing power, particularly among vulnerable populations.

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

The report calls for deeper global coordination and decisive collective action to address trade realignments, persistent price pressures and climate-related shocks. It highlights that poorer countries, landlocked nations and small island developing states remain especially constrained by debt burdens, limited policy space and exposure to external shocks.

The UN points to the Sevilla Commitment, adopted at the Fourth International Conference on Financing for Development held in Spain last year, as a blueprint for strengthening multilateral cooperation, reforming the global financial system and scaling up development finance.