AI-fuelled US resilience masks weaker growth and rising risks across emerging markets
Global growth is on track for its weakest decade since the 1960s even as the economy shrugs off shocks from tariffs, war and higher rates — a backdrop that favours select markets and sectors rather than a rising tide for all.
According to the World Bank’s latest Global Economic Prospects report, global output will grow about 2.6 percent this year and 2.7 percent in 2027, well below the pre‑pandemic pace above 3 percent.
Reuters said the bank now expects the 2020s to be the weakest decade for global growth since the 1960s, even after upgrading its 2025 and 2026 forecasts from June.
The upgrade rests heavily on the United States.
The World Bank estimates the US economy grew 2.1 percent last year instead of the 1.4 percent it expected in June, and it now forecasts 2.2 percent growth this year and slightly above 2 percent in 2025 and 2026.
The bank says “sharply higher investment in AI‑related equipment and structures” helped support that performance, according to The Wall Street Journal, alongside tax incentives and fiscal measures cited by the Washington Post.
At the same time, tariffs remain both a driver and a risk.
Reuters reported that firms rushed imports in early 2025 to “beat tariffs,” which distorted growth and trade.
The UN’s World Economic Situation and Prospects 2026 said a sharp increase in US tariffs created “new trade frictions,” although the absence of broader escalation limited immediate damage.
Both the World Bank and the UN now expect global trade growth to slow as front‑loaded shipments fade and higher duties bite more into investment and consumption.
The regional picture is uneven.
Reuters reported that the World Bank expects emerging market and developing economies to grow just above 4 percent in 2025 and 2026, with gains outside China running closer to the high‑3 percent range.
The bank raised its estimates for China, now seeing growth around the mid‑4 percent range in the next couple of years, supported by fiscal stimulus and exports to non‑US markets.
The eurozone and Japan, by contrast, are stuck below 1 percent growth in the World Bank’s forecast, with US tariffs and weaker domestic demand weighing on their outlook.
Both the World Bank and the UN underline the gap between headline resilience and underlying drag.
The Washington Post reported that World Bank chief economist Indermit Gill wrote that “global growth has unmistakably downshifted to a slower gear since the pandemic” and warned that the economy has become less capable of generating growth even as it appears more resilient to policy uncertainty.
Reuters said Gill also noted that global GDP per person in 2025 is about 10 percent higher than before COVID‑19, the fastest recovery from a major crisis in 60 years, but a quarter of developing countries still have lower per‑capita incomes than in 2019.
The UN projects global growth of 2.7 percent this year, slightly below an estimated 2.8 percent in 2025 and well under the pre‑pandemic average of 3.2 percent.
It warns that subdued investment, high debt and limited fiscal space could lock the world into a “persistently slower growth path,” and says many poorer, landlocked and small island states remain especially constrained.
On inflation, the UN estimates global headline inflation fell from 4.0 percent in 2024 to 3.4 percent in 2025 and could decline to 3.1 percent this year, but it stresses that “high and still rising prices” continue to erode the purchasing power of the most vulnerable.
That tension between slower growth, sticky prices and constrained policy room sits at the core of the medium‑term outlook.
