The World Bank is projecting global growth to edge down to 2.6% in 2026, as several supportive factors fade.

In particular, trade growth is set to weaken as firms scale back inventory accumulation and tariff effects intensify.

According to its January 2026 Global Economic Prospects, near-term risks to the global outlook are tilted to the downside.

“Growth could falter if trade tensions escalate, barriers rise further, or financial market sentiment deteriorates amid asset price declines, fiscal concerns, or inflation surprises. On the upside, AI-related activity could broaden, and firms’ adaptability to new trade conditions could support growth”, it pointed out.

Meanwhile, the World Bank says the global economy has shown notable resilience to heightened trade tensions and policy uncertainty.

“Last year, stockpiling of traded goods, strong risk appetite, and a surge in artificial intelligence (AI) spending supported activity, while supply chains adapted to rising trade barriers. The faster-than-expected pace of growth capped a five-year global recovery from the 2020 recession unmatched in more than six decades, but this masks a sharp divergence”.

While advanced economies have recovered robustly, with nearly 90% now above pre-pandemic per capita income levels, it said more than one-quarter of emerging market and developing economies (EMDEs)—particularly low-income countries and those affected by fragility and conflict—still have per capita incomes below 2019 level.

It continued that global efforts are needed to improve the trade environment, ease financing constraints, and mitigate climate risks.

“To catalyze investment and support long-term growth, policy makers in EMDEs should advance domestic reforms to diversify trade, strengthen macroeconomic frameworks, and remove structural bottlenecks. Without stronger economic dynamism, many EMDEs will struggle to create enough jobs for expanding working-age populations”, it added.