The global economy is proving more resilient than anticipated despite persistent trade tensions and policy uncertainty, according to the World Bank’s latest Global Economic Prospects report.
Global growth is projected to remain broadly steady over the next two years, easing to 2.6% in 2026 before rising to 2.7% in 2027, an upward revision from the June forecast.
The resilience reflects better-than-expected growth, especially in the United States, which accounts for about two-thirds of the upward revision to the forecast in 2026.
If these forecasts hold, the 2020s are still on track to be the weakest decade for global growth since the 1960s.
The sluggish pace is widening the gap in living standards across the world, the report finds. At the end of 2025, nearly all advanced economies enjoyed per capita incomes exceeding their 2019 levels, but about one in four developing economies had lower per capita incomes.
In 2025, growth was supported by a surge in trade ahead of policy changes and swift readjustments in global supply chains. These boosts are expected to fade in 2026 as trade and domestic demand soften.
However, the easing global financial conditions and fiscal expansion in several large economies should help cushion the slowdown, according to the report. Global inflation is projected to edge down to 2.6% in 2026, reflecting softer labour markets and lower energy prices. Growth is expected to pick up 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.
“But economic dynamism and resilience cannot diverge for long without fracturing public finance and credit markets. Over the coming years, the world economy is set to grow slower than it did in the troubled 1990s, while carrying record levels of public and private debt. To avert stagnation and joblessness, governments in emerging and advanced economies must aggressively liberalise private investment and trade, rein in public consumption, and invest in new technologies and education.”
In 2026, growth in developing economies is expected to slow to 4% from 4.2% in 2025 before edging up to 4.1% in 2027 as trade tensions ease, commodity prices stabilise, financial conditions improve, and investment flows strengthen.
Growth is projected to be higher in low-income countries, reaching an average of 5.6% over 2026-27, buoyed by firming domestic demand, recovering exports, and moderating inflation. However, this will not be sufficient to narrow the income gap between developing and advanced economies.
Per capita income growth in developing economies is projected to be 3% in 2026 – about a percentage point below its 2000-2019 average. At this pace, per capita income in developing economies is expected to be only 12% of the level in advanced economies.
These trends could intensify the job-creation challenge confronting developing economies, where 1.2 billion young people will reach working age over the next decade.
