UN Conference on Trade and Development (UNCTAD) Forecasts Limited Global Growth of 2.6 % in 2026
In a climate of slowing economies, geopolitical fragmentation, and tightening regulations, the UNCTAD warns that worldwide growth will be capped at 2.6 % next year. For Africa and other developing economies, this reshaping of global trade is both a challenge and a strategic opportunity.
A Deep‑Rooted Transformation, Not a Temporary Cycle
According to the “Global Trade Update” released in January 2026, world trade is undergoing a profound transformation rather than a short‑term downturn. Global growth is expected to plateau at 2.6 % in 2026, a historically low level outside of crisis periods. This slowdown drags down external demand, investment flows, and the ability of governments to boost activity through ambitious fiscal or industrial policies.
- Developing economies (excluding China) would see growth dip from 4.3 % to 4.2 % in 2026, with heightened volatility linked to dependence on external markets, capital flows, and commodity prices.
- Advanced economies are no longer the traditional engines of growth: the United States is projected to slow to 1.5 %, China to 4.6 %, while Europe remains constrained by weak domestic demand.
The environment is becoming more competitive, with market shares contested in a context of soft growth rather than shared expansion. Small, less‑diversified nations that cannot quickly redirect exports or absorb rising costs appear especially vulnerable.
Institutional and Regulatory Re‑configuration
The trade overhaul extends beyond economic cycles. UNCTAD highlights institutional fragility, especially around the reform of the World Trade Organization (WTO). Restoring a fully functional dispute‑settlement mechanism is deemed essential for preserving predictability and fairness.
At the same time, protectionism is resurging. Since 2025, tariffs have re‑emerged as a central tool in economic strategies—used to shield domestic industry, rebalance trade, or secure supply chains. This tariff proliferation raises uncertainty and can depress trade volumes even before measures take effect, due to anticipatory behavior.
Value‑Chain Re‑shaping and the Rise of South‑South Trade
Today, nearly two‑thirds of global trade flows through value chains that are being remoulded by geopolitical tensions, industrial policies, and technological innovation. Companies are adopting “risk‑aware” strategies that combine:
- Supplier diversification
- Partial reshoring
- Vertical integration
These approaches aim to safeguard access to critical inputs. Nations with efficient infrastructure, skilled labour, and stable regulatory frameworks stand to benefit, while peripheral economies that rely on low‑cost labour risk marginalisation. To stay integrated, they must invest in logistics, training, and a better business climate.
South‑South trade is booming: 57 % of developing‑country exports now go to other Southern economies, up from 0.5 trillion USD in 1995 to 6.8 trillion USD in 2025. Africa, still lagging in intra‑regional exchanges, could tap this momentum—provided it strengthens its infrastructure and trade frameworks.
Services, Digitalisation, and the Green Transition
The global trade mix is shifting increasingly toward services. Over the past decade, service exports have grown at an average 5.3 % per year, outpacing goods. In 2025, services grew 9 %, accounting for 27 % of total world trade. Digitally deliverable services are on the rise but remain concentrated in developed nations—only 16 % of Least‑Developed Countries’ service exports are digitally tradable.
The environmental transition is becoming a structural driver. Climate commitments from 113 countries could cut global emissions by 12 % by 2035. Meanwhile, the EU’s Carbon Border Adjustment Mechanism (CBAM) reshapes market access and imposes new constraints on exporters from developing nations.
Markets for critical minerals and agricultural products illustrate the tension between the energy transition and commercial security. Price corrections at the end of 2025 and export restrictions generate high geopolitical risk, while climate shocks and fertilizer volatility threaten global food security.
Outlook
UNCTAD’s Global Trade Update 2026 paints a picture of a world trade system in deep flux—marked by slowed growth, heightened fragmentation, and structural re‑configuration.
For Africa and other developing economies, the key challenge is to turn these dynamics into levers for inclusive development. Success will hinge on:
- Upgrading infrastructure
- Expanding human‑capital training
- Crafting coherent trade policies
- Adapting to new environmental standards
These steps are essential to avoid lasting marginalisation in an increasingly complex global system.
Further Reading
Read also: “Digital Transformation – Because It’s Time for Tunisia to Change Its Pace”
