World Bank sees resilient global growth in 2026 despite tariffs, but fading dynamism
Vehicles pass in front of the World Bank building in Washington, DC, on May 20, 2022. (Photo: REUTERS/Raphael Satter)
WASHINGTON: The global economy is proving more resilient than expected, with 2026 GDP growth expected to improve slightly over forecasts from last June, the World Bank said on Tuesday (Jan 13) while warning that growth is too concentrated in advanced countries and overall too weak to reduce extreme poverty.
The World Bank's semi-annual Global Economic Prospects report shows that global output growth will slow slightly to 2.6 per cent this year from 2.7 per cent in 2025 before edging back to 2.7 per cent in 2027.
The 2026 GDP forecast is up two-tenths of a percentage point from the last predictions released in June, while 2025 growth will exceed the prior forecast by four-tenths of a percentage point.
The World Bank said about two-thirds of the upward revision reflects better-than-expected growth in the US despite tariff-driven trade disruptions. It predicts US GDP growth will reach 2.2 per cent in 2026, compared to 2.1 per cent in 2025 - up two-tenths and half a percentage point from the June forecasts, respectively.
After an import surge to beat tariffs early in 2025 held back US growth for that year, bigger tax incentives will aid growth in 2026, offset by the drag of tariffs on investment and consumption, the World Bank said.
But if the current forecasts hold, the 2020s are on track to be the weakest decade for global growth since the 1960s and too low to avert stagnation and joblessness in emerging market and developing countries, the global lender said.
"With each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty," Indermit Gill, the World Bank's chief economist, said in a statement. "But economic dynamism and resilience cannot diverge for long without fracturing public finance and credit markets."
Growth in emerging market and developing economies will slow to 4.0 per cent in 2026 from 4.2 per cent in 2025, up two-tenths and three-tenths of a percentage point from the June forecasts, respectively. But excluding China, the 2026 growth rate for this group will be 3.7 per cent, unchanged from 2025, the World Bank said.
China's growth will slow to 4.4 per cent in 2026 from 4.9 per cent, but the forecasts are both up four-tenths of a percentage point from June due to fiscal stimulus and increased exports to non-US markets.
