Global growth 2026 projected at 2.6%, UNCTAD says
Global economic growth will slow to 2.6 per cent in 2026, down from 2.9 per cent in 2025, the United Nations trade and development agency has projected. Developing countries will feel the slowdown unevenly, with poorer nations facing the harshest pressure.
UN Trade and Development (UNCTAD) published the forecast on Friday in its flagship Trade and Development Report 2026, released in Geneva. The agency expects growth across developing economies to ease to 4 per cent, compared with 4.7 per cent last year.
The report blames geopolitical tensions, surging energy costs linked to the Middle East crisis, financial instability and shifting trade policies.
Poorer countries face widening inequalities
The report’s central warning is that the slowdown will not hit all countries equally. Developing economies face growing difficulty in accessing advanced technologies, investment and higher-value manufacturing opportunities.
Official development assistance is projected to fall by nearly 7 per cent in 2026, its third consecutive annual decline, tightening financing for poorer countries.
UNCTAD also flagged the uneven gains from artificial intelligence. AI products such as semiconductors have become the main driver of merchandise trade. Yet the report cautions that growth in AI-related trade does not automatically translate into broad development gains. In high-end AI server racks, corporate profits accounted for 68 per cent of traced value added, while workers received less than 15 per cent.
Advanced economies absorbed about 70 per cent of all new investment in semiconductors, AI and clean technology, leaving developing nations confined to the lower end of the value chain.
Asia to drive 59% of global growth
Asia is expected to contribute 59 per cent of global growth in 2026. India is projected to expand by 7.3 per cent, making it the fastest-growing major economy, followed by Indonesia at 5.2 per cent and China at 4.5 per cent.
India’s growth is supported by robust domestic demand, expanding manufacturing capacity and public investment in infrastructure, the report said. However, UNCTAD cautioned that the resilience of a few large Asian economies does not reflect the wider developing world, where many countries have fallen further behind since the mid-2010s.
Global trade reached a record $35 trillion in 2025, the report noted. Trade in goods and services is expected to grow by about 4 per cent in real terms in 2026, though the rise is driven more by higher energy prices than by stronger volumes.
Trade between China and the United States has fallen by more than 20 per cent since 2024, while East Asia has expanded commerce with both.
What it means for Pakistan
For Pakistan, the report’s warnings land close to home. The country is already wrestling with a trade deficit of $39.47 billion, sluggish exports, and an IMF programme that demands fiscal discipline.
Rising oil prices add to the pressure, since Pakistan imports most of its energy. A weaker global economy could also soften demand for Pakistani goods abroad, making export recovery harder.
The report’s findings echo recent warnings from the IMF chief about AI-driven economic inequality, adding to a growing consensus that the benefits of new technology are flowing to fewer hands.
UNCTAD’s prescription
The agency urged developing countries to pivot towards regional economic integration, invest in productive industries and diversify trade links. It argued that addressing energy and supply bottlenecks directly works better against supply-driven inflation than broad monetary tightening.
The report also pointed to renewable energy, now cheaper than new fossil-fuel options in over 90 per cent of cases, as a practical path for developing nations to cut import bills and build resilience.
The World Bank projected 2.5 per cent global growth for 2026 in June, while the IMF forecast 3 per cent in July. UNCTAD’s 2.6 per cent sits between the two, but its warning is the sharpest: without coordinated action, the slowdown will deepen the divide between rich and poor nations.
FAQ
What is UNCTAD projecting for global growth 2026?
UNCTAD projects global GDP growth of 2.6 per cent in 2026, down from 2.9 per cent in 2025. Developing economies are expected to grow by 4 per cent, easing from 4.7 per cent.
Why will developing countries suffer unevenly?
Poorer nations face falling development aid, rising energy costs, and limited access to advanced technology and investment. The report says AI-driven trade gains are flowing mainly to advanced economies and large firms.
Which economies will grow fastest in 2026?
India is projected to grow 7.3 per cent, the fastest among major economies, followed by Indonesia at 5.2 per cent and China at 4.5 per cent. Asia overall will contribute 59 per cent of global growth.
What does the report recommend?
UNCTAD urges stronger regional integration, investment in productive industries, diversified trade links, and a pivot to renewable energy to withstand mounting trade barriers and technology restrictions.
