UN forecasts global growth to ease to 2.7pc in 2026

UNITED NATIONS: Global economic growth is expected to slow to 2.7 per cent in 2026 from 2.8 per cent in 2025, before edging up to 2.9 per cent in 2027, according to a United Nations report released Thursday. The projected growth remains below the pre-pandemic average of 3.2 per cent recorded between 2010 and 2019.

The World Economic Situation and Prospects report noted that a sharp rise in US tariffs in 2025 created new trade tensions. However, the lack of wider escalation helped prevent major disruptions to global commerce.

“Despite the tariff shock, global economic activity proved resilient,” the UN Department of Economic and Social Affairs said, citing front-loaded shipments, inventory buildup, strong consumer spending, monetary easing, and relatively stable labour markets. While ongoing macroeconomic policy support is expected to soften the impact of higher tariffs, the report warned that global trade growth and overall economic activity are likely to slow in the near term.

United States

US economic growth slowed to 1.9 per cent in 2025 from 2.8 per cent in 2024, but is projected to rise modestly to 2.0 per cent in 2026 and 2.2 per cent in 2027. Expansionary fiscal and monetary policies are expected to support the recovery. Inflation is forecast to remain above the Federal Reserve’s 2 per cent target in 2026, though it should gradually ease as tariff pressures fade and housing costs stabilise.

China

China’s economy is projected to grow by 4.6 per cent in 2026 and 4.5 per cent in 2027, down from an estimated 4.9 per cent in 2025. The report said a temporary easing of trade tensions with the United States — including selective tariff reductions and a one-year trade truce — has helped stabilise confidence, while policy measures are expected to sustain domestic demand.

Europe

Growth in the European Union is forecast at 1.3 per cent in 2026 and 1.6 per cent in 2027, compared with 1.5 per cent in 2025. While consumer spending remains resilient, higher US tariffs and ongoing geopolitical uncertainty are expected to weigh on export performance.

South Asia

Economic growth in South Asia is projected to moderate to 5.6 per cent in 2026 from 5.9 per cent in 2025, before rebounding to 5.9 per cent in 2027. India is expected to grow by 7.4 per cent in 2025, slowing to 6.6 per cent in 2026 and 6.7 per cent in 2027. Strong consumer demand and robust public investment are expected to largely offset the negative effects of higher US tariffs.