GENEVA, SWITZERLAND / EuroWire / — UN Trade and Development (UNCTAD) said the global economy is set to slow in 2026 as higher energy prices, transport disruption, financial-market volatility and tighter financing conditions weigh on trade, investment and demand. The organization projected global growth at 2.6% in 2026, down from 2.9% in 2025, in its latest assessment of trade and development conditions.
The forecast marks a deterioration from the stronger start to the year, when global activity was supported by resilient trade, industrial output in developing economies and investment linked to artificial intelligence. The report said that momentum has weakened since geopolitical tensions intensified in late February, affecting energy markets, financial conditions and major shipping routes, including the Strait of Hormuz.
The slowdown is expected to be felt unevenly across economies. Developing countries face higher import bills for fuel, food and fertilizers, along with currency pressure, tighter external financing and weaker investor sentiment. The assessment said those pressures are particularly important for economies with high dependence on imported essentials and limited fiscal space.
Trade momentum weakens
Global merchandise trade remained relatively strong through early 2026, but the report said growth was concentrated in artificial intelligence related goods, including semiconductors, servers and data processing equipment. Outside those sectors, trade expansion was more limited across traditional industries and commodity linked segments, indicating a narrower base for the trade recovery.
UNCTAD projected real world merchandise trade growth to slow from 4.7% in 2025 to between 1.5% and 2.5% in 2026. The report said shipping disruption, higher insurance costs and risk premiums have affected maritime freight, especially for energy cargoes, while uncertainty has weighed on supply chains and investment decisions across several sectors.
Food and finance risks rise
The report also identified food security as a growing financial stability issue. Higher energy costs have added pressure to fertilizer prices and food inflation in many developing economies, while tighter financing conditions have exposed vulnerabilities in global food trading systems. Governments already facing higher debt service costs have less budget capacity to absorb new price shocks.
The agency said renewable energy and critical technologies are central to reducing exposure to fossil fuel volatility, while noting that investment remains uneven across regions. It said Africa has 60% of the world’s best solar resources but received 2% of global clean energy investment in 2024, underscoring the gap between resource potential and financing flows.