The World Bank has revealed that the global economy is displaying greater resilience than previously anticipated, defying persistent trade tensions and widespread policy uncertainty.
This assessment is contained in its latest Global Economic Prospects report released on Tuesday.
The report projects global growth to ease slightly to 2.6 percent in 2026 before rising to 2.7 percent in 2027, an upward revision from the Bank’s June 2025 forecast.
This improved outlook is largely attributed to stronger-than-expected performance in several major economies, particularly the United States, which accounted for roughly two-thirds of the upward revision.
However, the Bank issued a sobering warning that even with these positive adjustments, the 2020s are on track to be the weakest decade for global growth since the 1960s.
The report highlighted widening disparities in living standards, noting that while nearly all advanced economies will surpass pre-pandemic per capita income levels by the end of 2025, about one in four developing economies remains behind.
While global growth in 2025 was buoyed by surges in trade and rapid supply chain adjustments, the Bank expects these drivers to fade in 2026 as both trade and domestic demand soften.
Nonetheless, easing financial conditions and fiscal expansion in major economies are expected to provide a cushion against the slowdown. Inflation is also projected to decline to 2.6 percent in 2026, setting the stage for stronger growth in 2027.
World Bank Group Chief Economist, Indermit Gill, observed that while the global economy has become more resilient to policy uncertainty, its fundamental capacity to generate growth is weakening.
He stressed that economic dynamism cannot diverge indefinitely from the realities of strained public finances and tight credit markets, warning of slower growth amid record levels of public and private debt.
Gill urged governments in both emerging and advanced economies to liberalize private investment and trade, curb public consumption, and invest heavily in technology and education to avert stagnation.
Specific to the developing world, the report forecasts growth to slow to 4.0 percent in 2026 before edging up to 4.1 percent in 2027. Low-income countries, however, are expected to outperform the average, with a projected growth rate of 5.6 percent over the same period.
Despite this, the Bank noted that these gains would not be sufficient to close the income gap with advanced economies, as per capita income growth in developing nations is projected at 3.0 percent in 2026, about one percentage point below the 2000–2019 average.
Addressing fiscal health, the World Bank Deputy Chief Economist, Ayhan Kose, emphasized that restoring fiscal credibility is critical, citing the highest levels of public debt seen in emerging and developing economies in over half a century.
He advocated for well-designed fiscal rules to stabilize debt and rebuild policy buffers, noting that their effectiveness hinges on credibility, enforcement, and political commitment.