The world economy is becoming even more resilient than anticipated, with the growth of the economy projected in 2026 to be slightly better than it was projected last June, the World Bank said on 13th January, even as it cautiously notes that growth is too concentrated in developed nations and is, in general, too weak to alleviate extreme poverty.
According to the semi-annual report released by the World Bank on global economic prospects, global output growth will decline marginally to 2.6 percent in 2021 as compared to 2.7 percent in 2025 and then increase slightly to 2.7 percent in 2027.
The 2026 forecast is higher by two-tenths of a percentage point than the previous projections that were made in June, and the growth in 2025 will be higher by four-tenths of a percentage point than that of the previous forecast.
The World Bank indicated that approximately two-thirds of the upward revision is attributed to better-than-expected growth in the U.S in the face of tariff-induced disruption of trade. It foresees a growth in U.S. GDP to 2.2% in 2026 versus 2.1% in 2025 – two-tenths and a half-point above the June growth forecasts, respectively.
Following a surge in imports to evade tariffs at the beginning of 2025, which will hold back U.S. growth in 2025, the World Bank indicated that more significant tax incentives will contribute to growth in 2026, when tariffs will counter consumption and investment.
However, with the present projections, the 2020s will be the worst in terms of growth worldwide since the 1960s ¹and too few to prevent stagnation and unemployment in the emerging market and developing countries, the world lender announced.
According to the words of the chief economist of the World Bank, Indermit Gill, in a statement, “the world economy has been getting less efficient in creating growth and more resilient to policy uncertainty with each passing year. But economic dynamism and resilience would not long be able to remain separate without breaking the public finance and credit markets.”
Gill further noted that the world GDP per capita in 2025 was 10 percent more than the one before the COVID-19 pandemic – the quickest recovery in a significant crisis in 60 years. However, he states that many developing nations are falling far behind, with a quarter of the developing nations being left with lower per-capita earnings than in 2019, especially the poorest nations.
Economic expansion of China is likely to slow down
Increases in the emerging market and developing economies will decelerate to 4.0 in 2026 (4.2 in 2025) out of 2 and 3 percentage points, respectively, of the June estimates. However, the growth rate of this group will be at 3.7 but will remain at the same level in 2026 without changes, just like in 2025, according to the World Bank.
The growth rate of China will decelerate to 4.4 percent in 2026 compared to 4.9 percent in June, but with the stimulus package in the fiscal policy and its higher exports to the non-U.S. markets, forecasts are up four-tenths of a percentage point on both counts.
The euro zone will grow to 0.9 percent by 2026 compared to 1.4 percent in 2025 because the U.S. tariffs will drag the growth down; however, the growth will go back to 1.2 percent in 2027 as the European defense spending increases, the World Bank said.
The future of Japan is not much different from its expectations of a growth of 0.8 percent following a growth of 1.3 percent in 2025, a year that will see the country benefit from the front-loading of exports to the U.S. in order to evade the tariffs set by President Donald Trump. However, the 0.8% growth in the GDP of Japan will remain the same in 2027 due to slower consumption and investment in Japan, the World Bank said.
