World Bank sees resilient global growth

The World Bank has lifted its outlook for global economic growth in 2026, arguing the world economy is proving more resilient than previously expected despite ongoing trade frictions and signs of weakening long-term dynamism. The assessment offers cautious reassurance for policymakers grappling with slowing momentum after several years of shocks.

In its latest Global Economic Prospects report, the Bank now expects global output to expand by around 2.6 per cent in 2026, slightly above earlier forecasts, before stabilising near 2.7 per cent in 2027. The upgrade is driven largely by stronger performance in advanced economies, particularly the United States, which has benefited from robust domestic demand and policy support. However, the Bank stresses that this pace of growth remains historically weak and insufficient to reverse structural challenges facing many countries.

The report highlights that the current decade is on track to be the slowest for global growth since the 1960s. Trade tensions, including the lingering impact of higher tariffs, continue to distort supply chains and weigh on investment decisions. While some of the immediate drag from tariffs is fading, the Bank warns that policy uncertainty and fragmented trade relationships are undermining productivity and cross-border investment.

Emerging and developing economies face a more difficult outlook. Growth across these countries is expected to remain uneven, with many struggling to regain pre-pandemic income levels. Excluding China, growth in emerging markets is forecast to stay below four per cent, a level the Bank considers inadequate to make meaningful progress on poverty reduction. China itself is expected to see further moderation as structural constraints and weaker external demand take hold.

Advanced economies are also expected to lose momentum beyond 2026 as temporary fiscal support fades and higher interest rates continue to restrain investment. In Europe and Japan, subdued domestic demand and demographic pressures are expected to cap growth, reinforcing concerns about long-term competitiveness.

The World Bank concludes that resilience in headline growth figures should not obscure deeper vulnerabilities. Without renewed focus on structural reforms, investment in productivity, and more stable trade frameworks, the global economy risks settling into a prolonged period of low growth, widening inequality between countries and limiting gains in living standards.

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