GENEVA — Global economic expansion is projected to decelerate to 2.6% in 2026, down from 2.9% last year, as persistent energy price shocks and deepening geopolitical fractures test macroeconomic resilience across the world, according to the latest Trade and Development Report released by the United Nations agency for trade and development (UNCTAD). While overall global trade in goods and services is anticipated to expand by 4% in constant prices after reaching a record $35 trillion in 2025, UNCTAD underscored that the value gain is being driven primarily by elevated energy prices rather than durable commercial volume growth.

The report identifies severe geopolitical friction and industrial policy warfare as core drags on broader prosperity, revealing that direct bilateral trade between the United States and China has contracted by more than 20% since 2024. Strategic export restrictions, stringent investment screening, and altered supply-chain conditions have erected steep barriers to market entry. While high-tech commerce—particularly artificial intelligence hardware and advanced semiconductors—has served as the primary growth engine for merchandise trade, the UN trade body cautioned that rapid AI deployment does not automatically translate into broad-based productivity gains. Furthermore, analysts warned that extreme equity market concentration in a handful of technology conglomerates poses emerging systemic financial stability risks.

The uneven global landscape places an outsized growth burden on Asia, which is forecast to generate 59% of global economic expansion in 2026, led by India at 7.3%, China at 4.5%, and Indonesia at 5.2%. The alarming UNCTAD downgrade arrives on the eve of the IMF–World Bank Annual Meetings in Bangkok, where finance ministers and central bank governors face mounting calls to address sovereign debt burdens and high capital costs across developing nations before compounding energy and interest rate pressures trigger broader insolvency crises.