The United Nations’ World Economic Situation and Prospects (WESP) Report 2026, released on 8 January 2026, characterises the global economy of 2025 with a carefully chosen word: resilience. Global output growth, estimated at around 2.8 per cent in 2025, did not collapse under the weight of geopolitical conflicts, high interest rates, tightening fiscal space, or escalating trade disputes. Inflation moderated in many economies, financial systems avoided major stress, and several large developing economies—particularly in Asia—continued to expand at relatively robust rates.

Yet the same report is unequivocal in stating that resilience should not be mistaken for recovery. Growth in 2025 remained distinctly below the pre-pandemic average of the 2010s. Investment stayed weak, productivity growth remained anaemic, and global income convergence slowed. In effect, the world economy learned how to absorb shocks, but it did not rediscover how to grow decisively.

This assessment places the United Nations broadly in alignment with the World Bank’s recent warnings about a “lost decade” of development momentum, even as it differs in tone from the IMF’s somewhat more optimistic aggregate growth numbers. The UN’s narrative is less about survival and more about stagnation risk—a subtle but important distinction.

Looking Ahead to 2026: A Slower, More Uneven Global Expansion

For 2026, the UN projects global growth easing further to around 2.7 per cent. This is not a crisis scenario; nor is it a rebound. It is, instead, the continuation of a low-growth equilibrium in which the world economy moves forward, but without momentum.

Advanced economies are expected to grow modestly, constrained by ageing populations, weak productivity growth, and lingering fiscal consolidation pressures. Several European economies and Japan face particularly narrow policy space. The United States, while still relatively resilient, is no longer providing the growth impulse it once did.

Emerging and developing economies continue to show divergence. South and East Asia remain the most dynamic regions, driven by domestic demand and public investment. By contrast, many countries in Africa, parts of Latin America, and small island economies face a toxic combination of high debt servicing costs, climate vulnerability, and limited access to affordable finance.

The UN’s assessment of 2026 thus echoes UNCTAD’s long-standing concern that global growth masks deep structural asymmetries. The world economy may be expanding, but it is doing so in a way that leaves many countries structurally stuck.

India’s Growth Trajectory in a Fragmenting World

India as a Global Growth Outlier

Within this uneven global landscape, India occupies a distinctive position. The World Economic Situation and Prospects 2026 projects India’s GDP to expand by 7.4 per cent in calendar year 2025, making it one of the fastest-growing major economies in the world. This performance stands in sharp contrast to the subdued growth outlook for most advanced economies and many emerging markets.

The UN attributes India’s strong near-term momentum primarily to domestic factors: resilient private consumption, sustained public capital expenditure, and the cumulative effects of structural reforms in taxation, infrastructure, and financial intermediation. In an otherwise fragile global environment, India’s growth in 2025 emerges as a rare source of dynamism, reinforcing South Asia’s position as a key engine of global expansion.

Moderation, Not Reversal: India in 2026 and 2027

Looking beyond 2025, the UN projects India’s growth to moderate to about 6.6 per cent in 2026, followed by a marginal improvement to around 6.7 per cent in 2027. This deceleration is not presented as a loss of momentum, but as a transition toward a more sustainable medium-term growth path after an exceptionally strong year.

The moderation reflects base effects, evolving global trade conditions, and a more challenging external environment as tariff barriers, export controls, and geopolitical realignments begin to affect cross-border trade and investment flows. Importantly, even at these moderated rates, India is expected to grow significantly faster than the global average and most large economies, underscoring the depth of its domestic demand base and the continued role of public investment as a growth anchor.

UN’s Caveats: External Risks and Policy Vigilance

While the UN’s assessment of India’s prospects is broadly positive, it is not uncritical. The report explicitly flags external vulnerabilities, particularly those arising from intensifying trade policy uncertainty and global economic fragmentation. India’s export-oriented sectors, the UN notes, could face headwinds as global trade becomes increasingly shaped by geopolitical alignment rather than economic efficiency.

These concerns were echoed by Chris Garroway, the UN Country Economist for India, at the press briefing held on 8 January 2026, following the release of the WESP report. He emphasised that India’s growth outlook remains firmly supported by domestic consumption, public investment, tax reforms, and accommodative monetary conditions, but cautioned that escalating trade tensions and tariff regimes could weigh on exports and investor sentiment if global fragmentation deepens.

The UN’s message on India is therefore a calibrated one: strong fundamentals and high growth potential coexist with rising external risks. Sustaining growth through 2026 and 2027, in this view, will depend not only on domestic policy choices, but also on the evolution of the global economic order itself.

Trade Wars, Isolationism, and Policy Fragmentation: The Central Economic Risk of 2026

Perhaps the most analytically powerful section of the UN’s January 2026 report is its discussion of trade tensions and policy fragmentation. Unlike earlier periods, when trade conflicts were viewed as episodic or tactical, the UN treats them as a structural feature of the global economy in 2026.

The report highlights how the intensification of trade wars—through higher tariffs, export controls, industrial subsidies, and technology restrictions—has begun to reshape global trade flows in economically inefficient and politically destabilising ways. While trade volumes did not collapse in 2025, much of the observed resilience was driven by short-term adjustments rather than genuine confidence in open markets.

More troubling is the report’s warning that fragmentation now extends well beyond trade, encompassing development finance, technology governance, climate policy, and macroeconomic coordination. The result is a world economy that is simultaneously interconnected and divided—too interdependent to decouple smoothly, yet too distrustful to cooperate effectively.

The Imperative of Global Policy Intervention in 2026

Against this backdrop, the UN argues that 2026 must be a year of deliberate global policy intervention. It warns against excessive monetary tightness as inflation eases, cautions against premature fiscal retrenchment, and places unusual emphasis on social protection, inequality, and labour market adjustment in the face of technological change.

Above all, the report underscores that multilateral cooperation—on debt relief, climate finance, and trade dispute resolution—is no longer optional. It is an economic necessity.

Conclusion: Growth Without Trust Is Not Enough

The central message of the United Nations’ World Economic Situation and Prospects 2026 is both sobering and urgent. The global economy has demonstrated resilience, and countries like India have shown that strong growth remains possible even in difficult times. But resilience without cooperation, and growth without trust, are insufficient foundations for long-term stability.

India’s projected trajectory for 2026 and 2027 illustrates this paradox vividly: high growth in a low-trust global environment. Unless the world moves beyond fragmentation toward renewed cooperation, even the strongest performers risk finding themselves constrained by forces beyond their control.