Economic Buzz: UNCTAD projects global growth will slow from 2.9% in 2025 to 2.6% in 2026

According to a new report released on Tuesday by the UN Conference on Trade and Development (UNCTAD), the global economy remained resilient at the start of 2026, supported by trade, industrial production in developing countries and investment linked to artificial intelligence (AI). However, the report warns that geopolitical tensions have increasingly replaced trade tensions as the main source of global instability since energy markets, financial conditions and major shipping routes are disrupted by conflict in the Middle East.

UNCTAD projects global growth will slow from 2.9 per cent in 2025 to 2.6 per cent in 2026 due to higher oil prices, transport disruptions, market volatility and weaker investment demand. World merchandise trade growth is also expected to fall sharply, from 4.7 per cent in 2025 to between 1.5 and 2.5 per cent in 2026.

Developing economies are expected to face the greatest pressure, including rising fuel, food and fertilizer costs, weaker currencies, and tighter financing conditions. The report also notes that recent trade growth has been heavily concentrated in AI-related products such as semiconductors and data-processing equipment, while broader trade activity remains weak.

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