WASHINGTON, D.C. — The global economy is proving more resilient than expected despite historic trade tensions and policy uncertainty, with growth projected to remain broadly steady over the next two years, the World Bank said in its latest Global Economic Prospects report.
According to the report, global growth is expected to ease to 2.6 percent in 2026 before edging up to 2.7 percent in 2027, representing an upward revision from earlier forecasts.
The World Bank said the stronger-than-anticipated outlook reflects better-than-expected performance, particularly in the United States, which accounted for about two-thirds of the upward revision to the 2026 forecast.
Despite the resilience, the institution warned that if current projections hold, the 2020s are set to become the weakest decade for global growth since the 1960s. The slowdown is contributing to widening income disparities, with nearly all advanced economies surpassing pre-pandemic income levels, while about one in four developing economies remains poorer than in 2019.
Growth in 2025 was supported by front-loading of trade ahead of policy changes, rapid supply-chain adjustments, and easing financial conditions. The World Bank said these factors are expected to fade in 2026 as trade activity and domestic demand soften.
Global inflation is projected to decline to 2.6 percent in 2026, driven by softer labor markets and lower energy prices. Growth is expected to strengthen in 2027 as trade flows adjust and policy uncertainty diminishes.
“With each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty,” said Indermit Gill, the World Bank Group’s Chief Economist and Senior Vice President for Development Economics. He warned that slower growth combined with record public and private debt could risk “fracturing public finance and credit markets.”
Gill called on governments to liberalize private investment and trade, rein in public consumption, and increase investment in technology and education to prevent stagnation and rising unemployment.
The World Bank said growth in developing economies is expected to slow to 4 percent in 2026 before rising to 4.1 percent in 2027, supported by easing trade tensions, stabilizing commodity prices, and improved financial conditions.
Low-income countries are projected to grow at an average rate of 5.6 percent over 2026 and 2027, though the pace is not expected to be sufficient to narrow income gaps with advanced economies.
The report also highlighted mounting employment challenges, noting that about 1.2 billion young people in developing economies will reach working age over the next decade. Addressing this will require coordinated reforms to boost productivity, improve business environments, and mobilize private capital.
The World Bank warned that fiscal sustainability in many developing economies has been weakened by overlapping shocks and rising debt-servicing costs.
“With public debt in emerging and developing economies at its highest level in more than half a century, restoring fiscal credibility has become an urgent priority,” said M. Ayhan Kose, the World Bank Group’s Deputy Chief Economist. (Source: IANS)
