The United Nations Conference on Trade and Development (UNCTAD) said on Friday that global economic growth is likely to slow to 2.6% in 2026, compared with growth of 2.9% last year, as an energy shock stemming from the crisis in the Middle East tests the resilience of the global economy.
In its Trade and Development Report, UNCTAD forecast that global trade in goods and services would grow by 4% at constant prices after reaching an unprecedented 35 trillion dollars in 2025, noting that the projected increase is being driven by higher energy prices.
Asia leads global growth
Asia is expected to account for 59% of global economic growth in 2026, with India’s economy forecast to grow by 7.3%, China’s by 4.5% and Indonesia’s by 5.2%.
By contrast, trade between China and the United States has fallen by more than 20% since 2024, while 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
Artificial intelligence supports trade but increases risks
UNCTAD said artificial intelligence products, including semiconductors, are a key driver of trade in goods, but noted that growth in AI-related trade does not necessarily translate into broad-based development gains.
The conference warned that the artificial intelligence boom carries risks that could threaten financial stability, as markets become increasingly exposed to a limited number of companies.
Diverging growth forecasts
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% under the worst-case scenario.
The International Monetary Fund’s estimates were slightly more optimistic, putting global economic growth at 3% while pointing to risks including the Iran war, fragmentation, trade conflicts, price adjustments and artificial intelligence-related valuation corrections.
