Global economic growth may drop to 2.7% in 2026 from 2.8% in 2025

The world economy is heading for a modest slowdown this year as Trump’s trade barriers take a heavier toll and political uncertainties mount, according to the United Nations’ latest economic forecast released Thursday.

The UN predicts worldwide economic expansion will hit 2.7% in 2026, dipping from the 2.8% estimated for 2025. Growth should bounce back to 2.9% in 2027, but these rates are still well below the 3.2% average seen during the ten years before the pandemic.

Last year, countries managed to absorb tariffs that President Donald Trump slapped on most American trading partners in April. But their full impact will “become more evident in 2026,” the report states. International trade growth, which came in at 3.8% for 2025, is expected to drop to just 2.2% this year.

Secretary-General António Guterres pointed to mounting pressures facing nations worldwide. “A combination of economic, geopolitical and technological tensions is reshaping the global landscape, generating new economic uncertainty and social vulnerabilities,” he said.

US bucks trend while allies struggle

There are other threats beyond trade disputes. Armed conflicts around the globe could drag down growth rates, offsetting positive signs like increased consumer spending and stable job markets in many countries.

The United States bucks the general slowdown trend. Researchers project American growth will inch up to 2% this year from 1.9% in 2025, helped by “expansionary fiscal and monetary policies.”

Close American allies aren’t so lucky. The European Union will see growth ease to 1.3% in 2026. Japan’s expansion is forecast at 0.9%. Both numbers are down from their 2025 levels.

China, a primary target of American trade measures, will see slower growth at 4.6% in 2026, down from 4.9% last year. The country’s trade surplus still topped $1 trillion in the first eleven months of 2025, showing strong export performance to markets outside the United States.

Other developing regions show mixed prospects. Africa’s expected to grow 4.0% in 2026, up slightly from 3.9% in 2025. South Asia will moderate from 5.9% to 5.6%. East Asia slides from 4.9% to 4.4%. India specifically is forecast to expand 6.6% this year after 7.4% in 2025.

Latin America and the Caribbean face growth of 2.3% in 2026, a small decrease from 2.4% in 2025. The region is dealing with new American tariff measures, shifts in immigration rules, and higher shipping costs.

The poorest nations continue to struggle. Growth in least developed countries should reach 4.6% in 2026 and 5.0% in 2027. Those are improvements over the 3.9% estimated for 2025, but still far short of the 7% target needed for sustainable development goals.

Things look brighter on inflation side

Worldwide price increases are projected to ease to 3.1% in 2026 from an estimated 3.4% in 2025. Lower energy and food costs, steadier currency values, and slower wage growth are driving the decline. About 40% of countries saw inflation return to their long-term averages in 2025.

The job market remained steady last year. The global unemployment rate held at 5%. That figure’s projected to edge down to 4.9% in 2026. But beneath this stability, problems persist. Youth unemployment runs at more than twice the overall rate. Roughly 257 million young people worldwide are neither working nor in school.

The report notes that despite early fears about job losses from higher tariffs, a partial rollback of some measures later in the year helped ease those concerns.

Looking ahead, the UN warns that countries have limited room to respond to economic troubles. High debt levels and tight budgets constrain what governments can do. Declining foreign aid threatens support for essential services in the poorest nations.

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