The World Bank projects global growth will slow to 2.6% in 2026 as several supportive factors that boosted recent economic activity begin to fade.
According to its January 2026 Global Economic Prospects report, trade growth is expected to weaken as firms scale back inventory accumulation and the effects of tariffs intensify. Near-term risks to the global outlook are tilted to the downside.
“Growth could falter if trade tensions escalate, barriers rise further, or financial market sentiment deteriorates amid asset price declines, fiscal concerns, or inflation surprises. On the upside, AI-related activity could broaden, and firms’ adaptability to new trade conditions could support growth,” the report noted.
The World Bank highlighted that the global economy has demonstrated notable resilience despite heightened trade tensions and policy uncertainty.
“Last year, stockpiling of traded goods, strong risk appetite, and a surge in artificial intelligence (AI) spending supported activity, while supply chains adapted to rising trade barriers. The faster-than-expected pace of growth capped a five-year global recovery from the 2020 recession unmatched in more than six decades, but this masks a sharp divergence,” it said.
While advanced economies have largely recovered—with nearly 90% now above pre-pandemic per capita income levels—more than one-quarter of emerging market and developing economies (EMDEs), particularly low-income countries and those affected by fragility and conflict, still have per capita incomes below 2019 levels.
The report called for global efforts to improve the trade environment, ease financing constraints, and mitigate climate risks.
“To catalyze investment and support long-term growth, policymakers in EMDEs should advance domestic reforms to diversify trade, strengthen macroeconomic frameworks, and remove structural bottlenecks. Without stronger economic dynamism, many EMDEs will struggle to create enough jobs for expanding working-age populations,” it added.
