Emerging economies are expected to lead the expansion in 2026, with emerging market and developing economies growing a little above 4 percent and advanced economies near 1.5 percent. Baseline views place global growth in a 2.5 to 3.1 percent range as disinflation continues, consistent with the latest IMF WEO and World Bank GEP.
The balance of growth is shifting toward domestic demand. Private consumption, investment, and services are doing more of the work than merchandise trade, even as financing conditions remain tight and geopolitical tensions weigh on risk appetite.
IMF WEO and World Bank GEP split
The latest projections show a split in emphasis. One baseline in the IMF WEO points to global output of roughly 3.1 percent in 2026, with emerging markets contributing most of the increase and advanced economies expanding near 1.5 percent. Another baseline in the World Bank GEP places world growth closer to the mid-2 percent range.
Disinflation underpins the outlook. GDP-weighted global inflation is projected to average about 2.9 percent in 2025 and 2026, with energy prices easing the pressure on real incomes. Commodity trends in the World Bank’s commodity outlook reinforce that view.
Large Asian economies continue to set the tone. India is projected to grow in the mid-6 percent range in 2026 on the strength of investment and services, while China is expected to expand around 4.2 percent amid a slower property sector and ongoing rebalancing, according to the IMF WEO.
Across South Asia, growth remains among the fastest globally, with the World Bank’s South Asia update projecting 6.6 percent in 2025 and 5.8 percent in 2026. Several Southeast Asian economies are positioned to benefit from resilient services and manufacturing even as external demand softens, as reflected in the IMF’s Asia REO and the ADB outlook.
Policy priorities with tariffs and energy
Baseline projections embed the tariff changes and other policy shifts reflected in the World Bank GEP data cutoff of June 3, 2025. A prolonged period of elevated trade barriers and policy uncertainty could restrain investment and productivity, while climate-related disruptions and financial volatility add downside risk.
Policy priorities center on fiscal rebuilding, productivity-enhancing reforms, and infrastructure that lowers costs and speeds logistics. Where inflation and expectations are anchored, gradual monetary easing can support investment; where inflation proves stickier, restrictive settings will be needed.
