Global economic resilience still exceeds expectations

Recently, the World Bank released the January 2026 edition of its Global Economic Outlook report, which stated that despite ongoing trade tensions and policy uncertainty, the resilience of the global economy has exceeded expectations. The report predicts that the global economic growth rate will slightly decline to 2.6% in 2026 and rebound to 2.7% in 2027. The global economy is showing resilience, but growth momentum is weakening.

The report points out that global economic growth in 2025 exceeded previous expectations, mainly due to companies hoarding goods in advance to cope with tariff increases, a surge in investment in the field of artificial intelligence, improved financial environment, and supply chain adaptation to the impact of trade barriers. Even if there are no more major trade shocks in the future, as these supporting factors gradually fade away, trade growth will gradually slow down, major economies will weaken, and global economic growth will face a downturn. If there is a major trade shock, the risk of economic downturn will become more prominent.

Statistics show that by 2025, the global per capita gross domestic product (GDP) will be about 10% higher than in 2019. However, when broken down, this round of recovery is highly differentiated among countries, with nearly 90% of developed economies having recovered their per capita income to pre pandemic levels; However, over a quarter of emerging markets and developing economies, especially low-income countries and countries plagued by vulnerability and conflict, still have per capita incomes below 2019 levels, indicating that low-income and conflict prone countries are most severely affected. The report suggests that developing economies have insufficient fiscal space, with stimulus scales significantly smaller than developed economies during the pandemic, and debt levels reaching new highs, severely limiting their ability to recover after the pandemic. The weak recovery of developing economies has further widened the gap in living standards between them and developed economies, and poverty and employment issues have also intensified.

Global trade tensions continue to suppress economic recovery. Trade frictions and rising tariffs continue to suppress global trade and economic activity. The growth of trade in 2025 is mainly boosted by the "early import and export" activities of enterprises to avoid tariff risks. Starting from 2026, as inventory levels decline and the impact of tariffs becomes apparent, trade growth will significantly slow down, and trade policy uncertainty will weaken corporate investment and confidence. If trade tensions escalate, it will pose further downward pressure on growth.

The report points out that global inflation is generally on a downward trend, with most countries' inflation rates approaching their central bank targets. The impact of US tariffs on commodity inflation is partially offset by hoarding and supply chain adjustments, but financial market volatility remains an important source of risk. Data shows that from 2024 to 2025, global stock markets will rise, emerging economy bond inflows will increase, and the US dollar will weaken. However, if there are financial risks such as a significant stock market correction, rising debt concerns, and a rebound in inflation in the future, global growth may be 0.3 percentage points lower than the baseline forecast.

In the future, the prospects of developing countries are divided, and the problem of unstable recovery is prominent. The report points out that emerging markets and developing economies will perform better than expected in 2025, but their future growth will slow down, mainly due to unstable recovery. The report shows that the economic growth rate of emerging markets and developing economies will be about 4.2% in 2025, but economies other than China generally face the problem of unstable recovery, with investment activities relying on improved financial conditions and weak consumption and export momentum. The report predicts that the economic growth rate of developing economies will slow down to 4% in 2026. With the easing of trade tensions, stabilization of commodity prices, improvement of financial conditions, and increased investment flows, it is expected to slightly rebound to 4.1% in 2027.

Meanwhile, the report points out that employment challenges are a core challenge for developing economies, and if growth is insufficient, these economies will not be able to create enough job opportunities for the rapidly growing young population. The report predicts that by 2035, approximately 1.2 billion young people worldwide will enter the labor market, but per capita income in many countries will still be below pre pandemic levels. Economic restructuring, automation, trade frictions, and other factors will further intensify employment pressure, especially in key industries such as infrastructure, agriculture, healthcare, tourism, and manufacturing, where employment issues will become more prominent.

The report points out that in the face of trade, debt, climate, and financial risks, if national policies continue to be fragmented, the downside risks facing the global economy will further intensify. The report calls for maintaining and improving the multilateral trading system, establishing a predictable and stable multilateral trading system, and buffering the impact of the deterioration of the global trade environment by strengthening multilateral trade cooperation, reducing trade barriers, promoting regional and cross regional trade agreements; Secondly, we should support financing and debt relief for developing economies by promoting multilateral debt restructuring mechanisms, improving debt transparency, coordinating official and private creditors, and providing long-term, low-cost financing to strengthen comprehensive debt relief support for the most vulnerable countries; We need to strengthen global cooperation in addressing climate risks, including enhancing climate financing cooperation, supporting the construction of climate adaptive infrastructure, incorporating climate risks into macroeconomic and fiscal planning, and jointly mitigating climate risks, especially helping fragile economies enhance resilience; Fourth, we need to strengthen financial stability and macroeconomic policy coordination. Major central banks need to attach importance to policy communication, reduce "policy surprises", and pay attention to spillover effects on emerging economies.