In 2025, the world economy showed signs of “unexpected resilience” to US tariff increases, with solid consumer spending and receding inflation helping to sustain growth. This is according to the 2026 edition of the UN flagship report, World Economic Situation and Prospects (WESP). Amid trade realignments, continued price pressures, and climate-related shocks, the report calls for deeper global coordination and renewed collective action to promote resilient and sustainable growth.

The report forecasts a 2.7% increase in global economic output in 2026. This is slightly less than the 2.8% estimated for 2025 and well below the pre-pandemic average of 3.2%. It acknowledges “new trade frictions” created by US tariffs but concludes that “the absence of broader escalation helped limit immediate disruptions to international commerce.” However, the report anticipates the impact of higher tariffs to become more evident in 2026.

Highlighting subdued investment and limited fiscal space as persistent underlying weaknesses, the report warns that the world economy could settle into a consistently slower growth pattern. It shows that while financial conditions have improved thanks to “solid consumer spending amid monetary easing and broadly stable labour markets,” risks remain high, given “elevated asset valuations,” particularly in sectors marked by rapid advances in artificial intelligence (AI).

The report presents an uneven regional outlook, with economic growth projected as follows:

• The US: 2% in 2026, up from 1.9% in 2025;
• The EU: 1.3% in 2026, down from 1.5% in 2025;
• East Asia: 4.4% in 2026, down from 4.9% in 2025;
• South Asia: 5.6% in 2026, down from 5.9% in 2025;
• Africa: 4% in 2026, up from 3.9% in 2025;
• Latin America and the Caribbean (LAC): 2.3% in 2026, down from 2.4% in 2025.

At 3.8% uptick in 2025, global trade expanded faster than expected, despite increased policy uncertainty and rising tariffs. However, the report projects this momentum to slow, with trade growth forecast at 2.2% for 2026.

Headline inflation (the overall rise in all goods and services) slowed from 4% in 2024 to an estimated 3.4% in 2025 and is projected to further decline to 3.1% in 2026. However, the report points to inflation volatility and uncertainty, which can undermine long-term growth prospects and threaten the SDGs, especially the Goals relating to poverty reduction, food security, health, decent work, and reduced inequality.

“Even as inflation recedes, high and still rising prices continue to erode the purchasing power of the most vulnerable,” said UN Under-Secretary-General for Economic and Social Affairs Junhua Li at the launch of the report. “Ensuring that lower inflation translates into real improvements for households requires safeguarding essential spending, strengthening market competition, and tackling the structural drivers of recurring price shocks,” he stressed.

Calling for greater cooperation and support to vulnerable economies, the report highlights the Compromiso de Sevilla – the outcome document of the Fourth International Conference on Financing for Development (FfD4) – as “a renewed agenda to mobilize investment at scale, reform the global financial architecture, and enhance debt sustainability and domestic resource mobilization.”

Produced by the UN Department of Economic and Social Affairs (DESA) in partnership with the UN Conference on Trade and Development (UNCTAD) and the five UN regional commissions, the report was launched on 8 January 2026. [Publication: World Economic Situation and Prospects 2026] [Executive Summary] [Publication Landing Page] [DESA Press Release] [SDG Knowledge Hub Stories on WESP 2025, 2024, 2023, 2021, 2020, 2019, 2018, 2017, 2016, 2015, 2014, 2013 for LAC, 2013 for Africa, 2012, 2011, and 2009]