World Bank sees resilient global growth in 2026 amid tariffs but fading dynamism

The World Bank's semi-annual Global Economic Prospects report shows that global output growth will slow slightly to 2.6% this year

Petrochemical plants and refineries across the St. Clair River in Sarnia, Ontario, are seen from Port Huron, Michigan, US, Dec 8, 2025. REUTERS/Emily Elconin

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 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 percent this year from 2.7 percent in 2025 before edging back to 2.7 percent 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 percent in 2026, compared to 2.1 poercent 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."

Gill added that global GDP per person in 2025 was 10 percent higher than on the eve of the COVID-19 pandemic - marking the fastest recovery from a major crisis in the past 60 years. But he said many developing countries are being left behind, with a quarter of them saddled with lower per-capita incomes than in 2019, particularly the poorest countries.

CHINA'S ECONOMIC GROWTH EXPECTED TO SLOW

Growth in emerging market and developing economies will slow to 4.0% in 2026 from 4.2 percent 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 percent, unchanged from 2025, the World Bank said.

China's growth will slow to 4.4 percent in 2026 from 4.9 percent, 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.

Growth in the euro zone is set to slow to 0.9 percent in 2026 from 1.4 percent in 2025 due to the drag from US tariffs but recover to 1.2 percent in 2027 due to increases in European defense spending, the World Bank said.

Japan's outlook is much the same for 2026, with growth slowing to 0.8 percent after a rise of 1.3 percent in 2025, a year aided by the front-loading of exports to the US to beat President Donald Trump's tariffs. But slower consumption and investment in Japan will keep GDP growth unchanged at 0.8% for 2027, the World Bank said.