Global economy shows resilience but remains fragile
The global economy is proving more resilient than previously expected, with growth in 2026 now forecast to come in slightly higher than estimated last June, according to the World Bank’s latest Global Economic Prospects report. However, the institution cautioned that growth remains too weak and too concentrated in advanced economies to significantly reduce extreme poverty.
The World Bank expects global output growth to ease to 2.6% in 2026 from 2.7% in 2025, before edging back up to 2.7% in 2027. The 2026 forecast is two tenths of a percentage point higher than its June projection, while the 2025 estimate has been revised up by four tenths.
U.S. drives most of the upward revision
Roughly two thirds of the upgrade reflects stronger than expected performance in the United States, despite ongoing trade disruptions linked to tariffs. U.S. GDP growth is now projected at 2.2% in 2026, up from 2.1% in 2025 and higher than previously forecast.
The report noted that an early 2025 surge in imports to get ahead of tariffs weighed on growth that year. In 2026, larger tax incentives are expected to support activity, partially offsetting the drag from tariffs on investment and consumer spending.
Weak decade outlook raises concerns
Even with the revisions, the World Bank warned that the 2020s are on track to become the weakest decade for global growth since the 1960s. Growth at current levels would be insufficient to prevent stagnation, unemployment and fiscal stress in many emerging and developing economies.
Chief economist Indermit Gill said that while the global economy has shown resilience to policy uncertainty, weakening economic dynamism risks straining public finances and credit markets. Global GDP per person in 2025 stood about 10% above pre-pandemic levels, marking the fastest recovery from a major crisis in six decades.
Still, many developing nations are lagging behind. Around a quarter of them, particularly the poorest countries, have lower per capita incomes today than in 2019.
China and emerging markets slow
Growth in emerging market and developing economies is forecast to slow to 4.0% in 2026 from 4.2% in 2025, though both figures are slightly higher than earlier estimates. Excluding China, growth for this group is expected to remain flat at 3.7%.
China’s economic growth is projected to moderate to 4.4% in 2026 from 4.9% in 2025, supported by fiscal stimulus and stronger exports to non-U.S. markets.
Europe and Japan face headwinds
The euro zone is expected to see growth slow to 0.9% in 2026 from 1.4% in 2025 due to the impact of U.S. tariffs, before recovering to 1.2% in 2027 on higher defense spending.
Japan’s growth is forecast to ease to 0.8% in 2026 after a tariff-driven boost in 2025, with subdued consumption and investment keeping growth unchanged in 2027.
