The global economy has shown resilience amid turbulence during the past year, including shifting trade policies yet growth remains subdued and far below pre-pandemic levels, the UN said in a landmark report published on Thursday.

The world moved closer to ensuring that industrial development is a net positive for people and the planet on Thursday, with the adoption of the Riyadh Declaration on the closing day of the Global Industry Summit, a week-long UN event in the Saudi capital.

Thepredicts thatglobal economic outputwillgrow by 2.7 per cent this year, or slightly below the 2.8 per cent estimated for 2025 andwell below the pre-pandemic average of 3.2 per cent.

The report noted thata sharp increase in United States tariffscreated new trade frictions, though the absence of broader escalation helped limit immediate disruptions to international commerce.

Risksremainhigh

Unexpectedresilience tothetariffsshock, supported by solid consumer spending and easing inflation, helped sustain growthbutunderlying weaknesses persist.

Subdued investment and limited fiscal space are weighing on economic activity,meaningthat the world economy could settle into a persistently slower growth path than in the pre-pandemic era.

Apartial easing of trade tensionshashelped limit disruptions to international commerce butthe impact of higher tariffs, coupled with elevated macroeconomic uncertainties, is expected to become moreevidentthis year.

The report noted that financial conditions have eased amid monetary loosening and improvedconsumersentiment, but risksremainhigh,givenelevatedassetvaluationsespecially in sectors linked to rapid advances in artificial intelligence(AI).

Uncertainty and vulnerabilities

Meanwhile, high debt levels and borrowing costs are constraining policy space,particularlyfor many developing economies.

A combination of economic, geopolitical and technological tensions is reshaping the global landscape, generating new economic uncertainty and social vulnerabilities,saidUNSecretary-General Antnio Guterres.

He warned, however, thatmany developing economies continue to strugglewhich is putting progress towards achieving theSustainable Development Goals(SDGs) at risk.

Uneven regional outlook

The report finds that economicgrowth in the United Statesis projected at 2.0 per cent in 2026compared to 1.9 per cent in 2025supported by monetary and fiscal easing,thougha softening labour market willlikelyinfluencemomentum.

In theEuropean Union, economic growth is forecast at 1.3 per cent, down from 1.5 per cent in 2025, as higher US tariffs and ongoing geopolitical uncertainty dampen exports.

Meanwhile, inEast Asia, growth is projected at 4.4 per cent, down from 4.9 per centthe previous year,as the boost from front-loaded exports fades.The regions largest economy,China,is expected to grow by 4.6 per centslightly lower than in 2025supported by targeted policy measures.

Growth inSouth Asiais forecast at 5.6 per cent in 2026, easing from 5.9 per centin 2025. This is beingled by Indias 6.6 per cent expansionwhich the experts said isdriven by resilient consumption and substantial public investment.

InAfrica, output is projected to grow by 4.0 per centa slight uptickfrom 3.9 per cent in 2025, buthigh debt and climate-related shocks pose significant risks.

InLatin America and the Caribbean, output is expected to expand by 2.3 per centthis year, slightly down from 2.4 per cent in 2025, amid moderate growth in consumer demand and a mild recovery in investment.

International tradeslows

The report found thatglobal trade proved resilient in 2025,expanding bya faster-than-expected 3.8 per cent despite elevated policy uncertainty and rising tariffs.

Thisexpansion was driven by the front-loading of shipments early in the year and robust growth in servicestrade,howevermomentumisexpected to easeandtrade growthisprojected to slow to 2.2 per cent.

At the same time, investment growth hasremainedsubdued in most regionsdue togeopolitical tensions and tight fiscal conditions.

The report noted that monetary easing and targeted fiscal measures have supported investment in some economies, while rapid advances inAIfuelled pockets of strong capital spending in a few large markets.

However,anypotential gains from AIare likely to be unevenly distributed,which couldwidenexisting structural inequalities.

Rising pricesreduce purchasing power

The report alsounderscoredthathigh pricesremaina key global challenge even as disinflation continued.

Headlineinflationthat is, the overall rise in all goods and services in an economydeclined from 4.0 per centin 2024,to an estimated 3.4 per cent in 2025andis projected to slow further to3.1 per centthis year.

Even as inflation recedes, high and still rising prices continue to erode the purchasing power of the most vulnerable, said JunhuaLi,UNUnder-Secretary-General for Economic and Social Affairs.

Ensuring that lower inflation translates into real improvements for households requires safeguarding essential spending, strengthening market competition, and tackling the structural drivers of recurring price shocks.

Global action now

The report calls fordeeper global coordination and decisive collective actionamid the current era of trade realignments, persistent pricepressuresand climate-related shocks.

It highlights that many poorer nations, landlockedcountriesand small island developing states remain particularly constrained by debt burdens, limited policy space, and exposure to external shocks, thus underscoring theneed forgreater international support to promote resilient and sustainable growth.

The authors pointto theSevilla Commitment, the outcome document of theFourth International Conference on Financing for Developmentheld in Spain lastyear, asablueprintto strengthen multilateral cooperation, reform the international financial architecture, and scale up development finance.