NEW YORK, United States (CMC) — The global economy is expected to grow by 2.7 per cent in 2026, slightly below last year’s pace and well under pre-pandemic averages, as trade tensions, high debt and weak investment continue to cloud the outlook, the United Nations said on Wednesday.

According to the UN’s World Economic Situation and Prospects 2026 report, easing inflation and looser monetary policy helped sustain growth in 2025 despite sharp increases in US tariffs. However, the report warns that structural weaknesses—including limited fiscal space and subdued investment—could lock the world into a prolonged period of slower growth.

Global trade expanded by a stronger-than-expected 3.8 per cent in 2025, driven by early shipments and resilient services trade, but momentum is expected to cool to 2.2 per cent in 2026 as the impact of higher tariffs and policy uncertainty becomes more pronounced.

For Latin America and the Caribbean, economic growth is projected at 2.3 per cent in 2026, marginally lower than in 2025. The UN cited moderate consumer demand and a mild recovery in investment, while cautioning that high debt levels, limited fiscal flexibility and exposure to external shocks remain key vulnerabilities for the region.

Inflation continues to ease globally, with headline inflation projected to fall to 3.1 per cent in 2026, down from 3.4 per cent in 2025.

Still, the UN stressed that high prices continue to erode purchasing power, particularly in developing economies, where food, energy and transportation costs remain elevated.

United Nations Secretary-General António Guterres warned that economic, geopolitical and technological tensions are reshaping the global landscape, deepening uncertainty and social strain. He said many developing countries remain off track to meet the Sustainable Development Goals.

The report also highlighted risks linked to rising debt burdens and financial market volatility, including stretched asset valuations in sectors tied to artificial intelligence, which could widen inequality between and within countries.

Calling for renewed multilateral cooperation, the UN urged governments to strengthen coordination on trade, debt relief and climate finance.

It pointed to the Sevilla Commitment, adopted at the Fourth International Conference on Financing for Development, as a roadmap to reform the global financial system and improve access to development and climate funding—steps the UN said are critical for small and vulnerable economies, including those in the Caribbean.