Global economic growth is projected to slow to 2.6% in 2026 from 2.9% last year as higher energy prices driven by the Middle East war test economic and financial stability, UN Trade and Development (UNCTAD) said Friday.
In its Trade and Development Report 2026, the agency forecast global growth of 2.7% in 2027.
Developing economies are expected to grow 4% this year, down from 4.7% in 2025, while facing new technological and policy barriers.
Global goods and services trade is projected to expand 4%, after reaching a record $35 trillion last year, partly reflecting higher prices.
AI supports uneven growth
The US economy is forecast to grow 2.1% this year before slowing to 1.8% in 2027. AI investment and a stable labor market support demand, although persistent inflation erodes real wages.
Western Europe remains constrained by weak investment, trade fragmentation and volatile energy prices, while South Korea and Japan benefit from demand for semiconductors and electronics.
Developing economies face barriers
UNCTAD Acting Secretary-General Pedro Manuel Moreno said stronger-than-expected global resilience masked growing divergence.
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.
Advanced economies account for around 70% of new investment in semiconductors, AI and clean technologies, Moreno said, while developing economies 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.