Global economic growth is set to remain sluggish over the next two years as trade tensions, geopolitical uncertainty and limited investment—outside of artificial intelligence—continue to weigh on the world economy, according to a new report released Tuesday by the UN Conference on Trade and Development. The Geneva-based agency projects that global output will slow to 2.6% this year and maintain that muted pace in 2026, down from last year’s 2.9% expansion and 0.4 percentage point below the pre-pandemic average.
UNCTAD’s analysis paints a picture of resilience in 2024 and 2025 but warns that the foundations of that stability are far from secure. “The global economy and trade have shown resilience during 2024 and 2025,” said Rebeca Grynspan, the agency’s secretary-general, in an interview. “But the reasons may not be sustainable if we don’t lower uncertainty and we don’t go back to some predictability for investment really to pick up.”
The report, nearly 200 pages long, outlines a broad array of risks to economic stability beyond the evolving tariff policies of the United States under President Donald Trump. It notes that developing economies remain particularly exposed to exchange-rate volatility and to steep US tariffs on their exports—factors that could further suppress investment and growth in vulnerable regions.
A significant theme of the report is the widening disconnect between the rising economic weight of the Global South and its limited access to global capital markets. Countries in the Global South now account for more than 40% of global GDP, half of global foreign direct investment flows and about 45% of goods trade. Despite this, UNCTAD says these economies remain peripheral to equity and bond markets that are essential for long-term development financing.
The report also underscores structural imbalances between global trade and global finance. While roughly 72% of world trade still operates under World Trade Organization most-favored-nation rules, financial systems—supporting about 90% of international commerce—remain far more concentrated and influenced by private-sector norms, regulatory arbitrage and tightly centralized practices.
In the short term, this interdependence can provide stabilizing signals. UNCTAD cites April 2025 as an example, when financial markets first tumbled following Trump’s announcement of harsh “reciprocal tariffs” on April 2, then rebounded after the administration moderated duties on Chinese imports. But over the long run, the agency warns that the mismatch between open trade rules and centralized global finance reflects a deepening structural imbalance in the world economy.
At the core of these dynamics is the enduring dominance of the US dollar. Although the dollar’s share of international reserves has steadily declined, UNCTAD finds no credible alternative emerging to challenge its global role. “Despite its notable decline, the dollar continues to account for a far greater share of central banks’ reserve assets than any other currency,” the report said. “While the move away from the dollar in official foreign-exchange reserves is clear, no indication exists of another currency as a potential replacement.”
The findings signal that without greater predictability in trade and investment policies—and a rebalancing of global financial structures—growth could remain stuck at subdued levels well into the future.
