UNCTAD said on Friday that global economic growth is expected to slow to 2.6% in 2026, down from 2.9% last year, as an energy shock stemming from the crisis in the Middle East tests the resilience of the global economy.
Global trade and energy
In its Trade and Development Report, UNCTAD said trade in goods and services is expected to increase by 4% at constant prices, after global trade reached an unprecedented $35 trillion in 2025. However, the expected increase is being driven by higher energy prices.
Trade between China and the United States has fallen by more than 20% since 2024, as East Asia has expanded trade with China and North America.
Export controls, investment screening and supply-chain conditions make it difficult for new participants to access strategic sectors
Asia to lead growth in 2026
Asia is expected to account for 59% of global economic growth in 2026, with India's economy growing by 7.3%, China's by 4.5% and Indonesia's by 5.2%.
Artificial intelligence and financial stability risks
UNCTAD said artificial intelligence products, such as semiconductors, are a major driver of goods trade, but noted that growth in AI-related trade does not necessarily translate into broad-based development gains.
The organization warned of risks that the AI boom could pose to financial stability, as markets become increasingly exposed to a limited number of companies.
Diverging forecasts from international institutions
The World Bank cut its global growth forecast to 2.5% in June because of the war in the Middle East, while forecasting that growth could fall to 1.3% in the worst-case scenarios.
The International Monetary Fund's forecast was slightly more optimistic, putting global economic growth at around 3%, while pointing to risks including the Iran war, fragmentation, trade disputes, and corrections in AI-related prices and valuations.
