- Global growth is expected to ease in 2026.
- Trade is still resilient, but AI-related sectors are masking weaker momentum elsewhere.
- Food security is becoming a financial stability concern.
- Developing economies face capital outflow risks and tighter financing conditions.
- Clean energy, predictable trade and stronger financial safeguards can reduce future exposure.
The global economy entered 2026 with resilience, supported by trade, industrial production in developing economies and investment linked to artificial intelligence (AI).
But rising geopolitical tensions are now testing that momentum, according to UN Trade and Development (UNCTAD).
UNCTAD’s ‘Trade and Development Foresights 2026: Global economy faces a geopolitical challenge’ warns that the global economy is moving from an initial phase of supply disruptions and inflation into a more fragile period, where prolonged uncertainty could trigger shortages and wider financial stress.
From trade uncertainty to geopolitical pressure
While recent years were shaped largely by trade tensions and policy uncertainty, geopolitical risks are now becoming the dominant source of instability for the global economy.
UNCTAD projects global growth to slow from 2.9% in 2025 to 2.6% in 2026 as higher energy prices, transport disruptions, market volatility and the search for financial safe assets weigh on investment and demand.
Developing economies are especially exposed. Many face rising bills for fuel, food and fertilisers while also dealing with currency pressure, tighter financing conditions and weaker investor sentiment.
Much of the resilience seen in 2025 was driven by the growing role of developing economies in global trade and growth. Prolonged instability now risks undermining that momentum.
AI trade boom masks broader slowdown
Global merchandise trade remained relatively strong through early 2026, but much of the momentum was concentrated in AI-related products such as semiconductors, servers and data-processing equipment.
Outside these sectors, trade growth remained far more modest, especially in traditional industries and commodity-linked sectors.
UNCTAD expects global merchandise trade growth to slow from 4.7% in 2025 to between 1.5% and 2.5% in 2026 as uncertainty and geopolitical tensions affect supply chains, shipping and investment decisions.
Food security under growing financial strain
The report also highlights increasing pressure on global food systems.
Higher energy prices are driving up fertilizer costs and adding to food inflation pressures across many developing economies. At the same time, volatility and tighter financing conditions are exposing vulnerabilities across global food trading systems.
The report also warns that financial stress among major food trading firms could amplify food security risks if disruptions persist, adding pressure on governments already facing limited fiscal space.
UNCTAD warns that food security is no longer only about availability and prices. It is increasingly also a financial stability concern, especially for governments already facing higher debt-servicing costs.
Building resilience through investment and transition
Despite rising risks, UNCTAD says the current environment also points to practical ways to strengthen resilience.
Renewable energy is becoming increasingly cost-competitive and strategically important for reducing exposure to fossil fuel shocks. But investment remains highly uneven, limiting the ability of many developing economies to benefit.
UNCTAD calls for stronger international cooperation, more predictable trade conditions, greater financial safeguards for developing economies and faster investment in affordable clean energy to stabilise growth and reduce vulnerability to future shocks.
