Global economic growth is steady but remains subdued as global trade tensions, geopolitical uncertainty and persistent fiscal challenges aect several key economies. The UN Trade and Development (UNCTAD) estimates GDP growth in 2025 at 2.8%, which is forecast to decline slightly to 2.7% in 2026 before edging up to 2.9% in 2027 – remaining well below the pre-pandemic (2010–2019) average of 3.2%.

“Growth in Europe, Japan, and the United States is projected to hold broadly steady but proceed at a moderate pace, with monetary or fiscal support continuing to underpin demand. Several large developing economies, including China, India, and Indonesia, are expected to continue experiencing solid growth driven by resilient domestic demand or targeted policy measures,” UNCTAD stated in its report. 

While legacy sectors struggle, rapid advances in artificial intelligence (AI) and clean energy technologies, together with the expansion of digital infrastructure and growing demand for critical minerals, are spurring new waves of investment and innovation.

“However, such activity remains heavily concentrated in a few major economies with substantial technological and financial capacity, leaving many countries behind and exacerbating existing disparities, UNCTAD noted. “From a risk perspective, vulnerabilities persist on both the financial and trade fronts.”

UNCTAD added that global growth prospects over 2026–2027 point to moderate expansion across major regions, shaped by fiscal support, easing monetary conditions, and persistent structural constraints. 

THE AMERICAS AND EUROPE

In the US, growth slowed from 2.8% in 2024 to an estimated 1.9% in 2025, as strong consumer spending and AI-related investment were oset by weakness in residential and commercial construction. Growth is projected to edge up to 2% in 2026 and 2.2% in 2027, supported by accommodative policies, although inflation is expected to remain above target in the near term. Risks stem from policy uncertainty, fiscal pressures, and potential equity market corrections. 

Latin America and the Caribbean are expected to maintain modest growth, supported by consumption and investment, but face challenges from shifting trade policies, migration trends, and higher shipping costs. 

The European Union is forecast to grow by 1.3% in 2026 and 1.6% in 2027, driven primarily by resilient household demand and improving real wages. Export performance, however, is likely to be constrained by higher US taris and geopolitical uncertainty, while long-standing structural challenges continue to limit productivity gains.

AFRICA AND THE CIS

Africa’s growth is forecast to rise modestly to just above 4% by 2027, underpinned by improved macroeconomic stability and investment, though high debt burdens, limited fiscal space, and uneven commodity trends continue to weigh on prospects.

Growth across the Commonwealth of Independent States (CIS) is expected to remain modest, with divergence between a slowing Russian economy and continued strength in Central Asia. 

MIDDLE EAST AND SOUTH ASIA

In the Middle East, growth is projected to strengthen from an estimated 3.4% in 2025 to 4.11% in 2026 and 4% in 2027, as oil exporters benefit from higher production and diversification eorts, although geopolitical risks persist.

South Asia also remains relatively strong, led by India’s robust domestic demand and public investment. 

EAST ASIA AND AUSTRALIA

In developed Asia, Japan’s growth is expected to moderate to around 1% by 2027, as consumption recovers only gradually, and exports face external headwinds. Australia and the Republic of Korea are projected to experience stronger growth in 2026 on the back of firmer domestic demand. 

China’s economy is projected to expand by 4.6% in 2026 and 4.5% in 2027, supported by policy measures, easing trade tensions with the US, and strong exports to non-US markets. Nonetheless, risks remain from potential renewed trade frictions, weaker external demand, and persistent weakness in the property sector. 

Across East Asia, growth is expected to moderate as earlier export gains fade.

GROWTH APPEARS STABLE

Taken together, the outlook for 2025-2026 suggests a global economy that remains on a stable growth path, despite periodic disruptions linked to trade policy, fiscal events, and geopolitical developments. Expansionary fiscal measures and accommodative monetary conditions have played a central role in sustaining activity across both advanced and emerging economies. At the same time, the gradual easing of trade tensions has helped reduce uncertainty, supporting cross-border investment and industrial output. 

Global trade remained resilient in 2025, expanding by an estimated 3.8% despite heightened trade policy uncertainty and higher US taris, UNCTAD noted. 

“Growth was supported by robust merchandise trade, boosted by the front-loading of shipments ahead of new taris, and by the continued strong expansion of trade in services, particularly in travel, digital, and professional services,” the agency said. “However, momentum is expected to soften in 2026, with global trade projected to slow to 2.2% as front-loading eects fade and taris become more entrenched.”