The latest United Nations report "World Economic Situation and Prospects" (WESP 2026) indicates that while the global economy shows some resilience amid the aftermath of high interest rates and multiple shocks, the growth rate is expected to slow down to 2.7% in 2026, compared to 2.8% in 2025. It may slightly recover to 2.9% in 2027, but will still lag behind the pre-pandemic long-term average of about 3.2%.
Tariffs and Uncertainty: Spreading Trade Tensions and Rising Policy Coordination Challenges
The report attributes the "downshift" in growth more to the external environment: the delayed effects of tariffs are gradually becoming apparent, while geopolitical uncertainties are expanding, compounded by limited fiscal space in some economies which makes corporate investment and cross-border trade more likely to turn conservative. The United Nations warns that without stronger macroeconomic policy coordination by major economies, current pressures might push the global economy onto a more prolonged low-growth trajectory.
Inflation and Financial Conditions: Data Improvements, but Cost of Living Pressure Persists
Regarding inflation, the United Nations expects global overall inflation to continue cooling: from 3.4% in 2025 to 3.1% in 2026 (around 4.0% in 2024). However, "reducing inflation" does not equate to "reducing costs" – key expenditures such as food, energy, and housing continue to squeeze real incomes, particularly affecting low-income groups more noticeably.
Trade and Risk Warnings: After Pre-Shipping Eases, Momentum May Weaken
The United Nations also mentioned that global trade performed better than expected in 2025, partly due to companies shipping in advance to avoid potential tariffs, as well as robust service trade; however, as these one-off factors diminish and trade barriers remain, trade growth is expected to slow in 2026.
On the financial side, as interest rates decline and sentiments improve, looser financial conditions aid the recovery of capital flows; however, the report also cautions that high asset valuations (including some AI-related sectors) and still-elevated financing costs could pose risks if volatility increases.
