Developing Economy Growth Bifurcate As India, Indonesia, China Grow Faster: UNCTAD
Global growth is predicted to slow to 2.6 per cent in 2026 and 2.7 per cent in 2027: Reports
CHENNAI: Global growth is predicted to slow to 2.6 per cent in 2026 and 2.7 per cent in 2027, down from 2.9 per cent in 2025 as inflationary pressures, tighter monetary policy and higher borrowing costs weigh on private consumption as well as investment and trade, finds the UN's trade and development body. The growth in India, Indonesia and China is bifurcating the growth in the developing world as most others have fallen behind the growth rate of the mid-2010s.
Global trade grew 4.4 per cent in real terms in 2025 and should expand about 4 per cent in 2026, well above what was anticipated when the conflict in the Middle East began.
Growth in developing economies is expected to slow from 4.7% in 2025 to 4% in 2026. However, developing economies present a bifurcated picture. High-growth economies like India, Indonesia and China are driving global expansion, while import-dependent ones absorb the same energy and rate shocks with far less fiscal room, compounded by rising debt servicing costs.
India is projected to grow by 7.3%, Indonesia 5.2% and China 4.5%. Yet outside a few Asian frontrunners, most developing economies have fallen further behind since the mid-2010s.
India is the fastest-growing major economy, with GDP projected to expand by 7.3 per cent in 2026 and 6.8 per cent in 2027 due to robust domestic demand, increasing manufacturing capacity and public infrastructure programmes. Together, these factors sustain growth despite heavy reliance on oil imports.
India continues to post dynamic growth in household consumption, estimated at 6.9 per cent this year and 5.6 per cent next. These rates nonetheless mark a significant deceleration from previous years, as higher prices and input costs rein in expansion.
Developed economies, as a group, are broadly characterized by stagnation, tightening monetary environments and anemic industrial performance as they absorb the brunt of the 2026 energy shock. The energy shock has laid bare the macroeconomic cost of energy dependence.
Global growth is predicted to slow to 2.6 per cent in 2026 and 2.7 per cent in 2027, down from 2.9 per cent in 2025. Inflationary pressures, tighter monetary policy and higher borrowing costs weigh on private consumption as well as investment and trade, although the latter retain momentum from the artificial intelligence boom.
Artificial intelligence products, comprising advanced computing equipment deployed primarily in new data centres, have become the main driver of merchandise trade. As demand for artificial intelligence goods moderates, growth of trade in services may outpace that of goods in 2027.
