Kathmandu, January 12, 2026
The United Nations Department of Economic and Social Affairs (UNDESA) has released its World Economic Situation and Prospects 2026 report, presenting a cautiously optimistic yet sobering forecast for the global economy this year. According to the report, global economic output is expected to grow by 2.7% in 2026, a marginal decline from an estimated 2.8% growth in 2025, and significantly below the 3.2% average observed before the COVID-19 pandemic.
The slowdown reflects lingering structural weaknesses, subdued investment, and ongoing uncertainties that continue to temper global momentum despite pockets of resilience.
Key Global Highlights
Growth Outlook: 2.7% expansion in 2026, underperforming historical averages and slightly lower than 2025 figures.
Trade and Investment: International trade growth is projected to slow, with trade expansion easing due to elevated policy uncertainty and evolving tariff policies. Investment remains restrained across most regions.
Inflation Trends: Global inflation continues to decelerate, with headline inflation falling from around 4.0% in 2024 to an estimated 3.4% in 2025, and forecast to decline further in 2026. Still, high prices continue to erode household purchasing power in many countries.
Regional Performances
The report highlights significant variation across regions, with East and South Asia emerging as growth engines in an otherwise subdued global picture:
South Asia is expected to grow by around 5.6%, led by strong domestic demand and public investment, particularly in India.
East Asia is forecast to expand near 4.4%, though slightly slower than in previous years.
Africa may see growth around 4.0%, but high debt levels and climate vulnerabilities pose continued risks.
Latin America and the Caribbean is projected to grow at about 2.3%, slightly lower than 2025.
Downside Risks and Challenges
The report underscores multiple headwinds that cloud the near-term economic horizon:
Trade Tensions: Elevated tariff barriers and geopolitical friction continue to strain global commerce, potentially slowing trade growth further.
Fiscal Constraints: Many economies are facing tight fiscal space, limiting policy flexibility to stimulate growth.
Inequality & Structural Gaps: Advancements in technology such as AI are generating growth in certain sectors, but potential gains may be unevenly distributed, risking wider inequality.
Expert View
UN economists emphasize that while the world economy has demonstrated resilience - buoyed by strong consumer spending and easing monetary conditions - the current growth trajectory falls short of pre-pandemic trends and underscores the need for enhanced global cooperation, targeted investment, and structural reforms to sustain long-term expansion.
