UNCTAD forecasts 2.6% global growth in 2026 amid energy shock

UN Trade and Development on Friday projected global economic growth would slow to 2.6% in 2026 from 2.9% last year as the Middle East war drives energy prices higher, testing financial stability worldwide. The agency said in its Trade and Development Report 2026 that growth would edge up slightly to 2.7% in 2027, though developing economies are expected to expand 4% this year, down from 4.7% in 2025, while confronting new technological and policy barriers. Global goods and services trade is projected to grow 4% in 2026 after reaching a record $35 trillion last year, according to the Geneva-based body.

US and Asia outperform Europe

The US economy is forecast to grow 2.1% this year before decelerating to 1.8% in 2027, supported by artificial intelligence investment and a stable labor market even as persistent inflation erodes real wages. Western Europe remains constrained by weak investment, trade fragmentation and volatile energy costs, while South Korea and Japan benefit from robust demand for semiconductors and electronics.

Developing world 'no longer catching up'

UNCTAD Acting Secretary-General Pedro Manuel Moreno said stronger-than-expected global resilience masked growing divergence between rich and poor nations. "Outside a few fast-growing Asian economies, the developing world is no longer catching up with advanced economies," he said. "Industrialization, goods trade and integration into global value chains are becoming less reliable routes to higher incomes as governments increasingly pursue strategic and national security objectives," he added, noting that advanced economies account for roughly 70% of new investment in semiconductors, artificial intelligence and clean technologies while developing nations lead in critical minerals but struggle to add value.

He also warned of volatile portfolio flows and an expected third consecutive annual decline in official development assistance.