(Jan 13): The World Bank raised its forecast for growth this year, saying the global economy has proved surprisingly shock-proof in the face of an “historic” escalation in trade tensions.
Real gross domestic product (GDP) is now projected to rise by 2.6% in 2026, up from a June forecast of 2.3%, the Washington-based lender said in a report Tuesday. The US economy saw a sizeable boost to an estimated 2.2% gain this year, compared with just 1.6% previously.
The new 2026 global forecasts mark a modest slowdown from stronger growth in 2025 than the lender had anticipated. A burst in trade as companies and households rushed to get goods in anticipation of US President Donald Trump’s tariffs, combined with a smaller impact from the high import levies and a push in intelligence spending helped bolster world growth to an estimated 2.7% last year, the World Bank said in its report.
“Global growth is becoming range-bound. There is resilience, but growth is not accelerating,” said Ayhan Kose, the lender’s deputy chief economist, noting that real GDP growth has stayed between 2.6% and 2.8% since 2023, compared with an average of 3.2% in the decade before the pandemic.
The lender is following the International Monetary Fund (IMF) in marking up its estimates for 2025. The IMF boosted its own projections for last year in October, while warning about strains ahead. It is scheduled to provide fresh forecasts on Monday.
In its report, the World Bank said the world economy’s resilience has been “notable”, but risks remain tilted to the downside. “There is a significant risk that trade tensions could re-escalate, especially as higher tariffs could redirect exports to third countries, leading domestic producers in those countries to seek protection from increased import competition,” the bank said.
See also: Global central bankers show ‘full solidarity’ with Fed’s Powell
The World Bank’s report also showed:
- China is expected to grow 4.9% in 2025 and 4.4% in 2026, both revised higher than previously expected.
- Global inflation in 2026 may edge down to 2.6%, 0.3 percentage point lower than previously expected.
- The price of Brent crude oil is projected to fall to US$60 (RM243.36) per barrel in 2026 from a US$69 average in 2025.
- Job creation remains a priority as 1.2 billion young people will reach working age in emerging markets over the next decade.
Uploaded by Chng Shear Lane
