The world economy is expected to grow more slowly next year, as an energy shock linked to conflict in the Middle East weighs on trade, investment and household spending.
UNCTAD, the United Nations trade and development body, expects world growth to slow to 2.6% in 2026, down from 2.9% in 2025. The forecast, according to reports, reflects higher energy costs and the uncertainty they create for factories, transport and consumers.
Trade is still expected to expand, but for a complicated reason. UNCTAD said trade in goods and services may grow by 4% in constant prices, after reaching a record $35 trillion in 2025. Higher energy prices are a major driver of that value, which is not the same as a boom in the volume of goods moving around the world.
Asia is projected to provide most of the momentum. The agency expects the region to account for 59% of global growth, with India at 7.3%, China at 4.5% and Indonesia at 5.2%. Those figures underline a familiar pattern: large Asian economies, powered by domestic demand and manufacturing, are carrying a disproportionate share of expansion while other regions struggle with costs and weak confidence.
For poorer countries, the risk is sharper. Expensive fuel and food imports can widen deficits, push up inflation and force governments to choose between subsidising essentials and investing in infrastructure. That is why energy shocks often hit developing economies harder than the headline global number suggests.
Businesses will read the forecast as a warning to plan for volatility. Shipping routes, insurance costs and commodity prices can all shift quickly when tensions affect supply. Companies that depend on just-in-time deliveries are especially exposed.
Still, the outlook is not one of contraction. Growth of 2.6% means the world economy continues to expand, and trade continues to rise, even if the gains are unevenly shared.
The test for 2026 will be whether policymakers can contain energy-driven inflation without choking off the investment needed for jobs, climate projects and new industries. On UNCTAD’s numbers, that balance will be difficult, and Asia will have to do much of the heavy lifting.
