By Atlantic Reports

The United Nations has projected that global economic growth will slow to 2.6 per cent in 2026, warning that rising geopolitical tensions, financial instability and widening technological inequalities could further weaken economic prospects for developing countries.

The forecast, contained in the Trade and Development Report 2026, released on Friday, October 9, in Geneva by UN Trade and Development (UNCTAD), suggests that poorer economies could face increasing difficulties securing the investment, technology and financing needed for sustainable development.

According to the report, global economic growth is expected to decline from 2.9 per cent in 2025 to 2.6 per cent in 2026.

Developing economies are projected to experience a sharper slowdown, with growth falling from 4.7 per cent in 2025 to four per cent in 2026.

The report, titled The Geoeconomics of Development, examines how geopolitical competition, technological advancement and changing international trade policies are reshaping the global economy.

Developing Economies Face Sharper Slowdown

UNCTAD's projections indicate that developing countries will continue to expand economically, but at a slower pace than in the preceding year.

The expected decline of 0.7 percentage points in developing economies is more pronounced than the projected 0.3 percentage-point reduction in global growth.

This matters because many developing countries require sustained economic expansion to create employment, improve public services and support growing populations.

Slower growth can weaken government revenues, constrain private investment and reduce opportunities for businesses and workers.

For households already struggling with living costs, a weaker economy may make it more difficult to secure stable employment and improve living standards.

However, the projections represent an aggregate outlook. Individual countries may experience different outcomes depending on their economic structures, domestic policies and exposure to international shocks.

Geopolitical Tensions and Energy Costs Threaten Recovery

The UN agency identified geopolitical tensions, rising energy costs, financial instability and changing international trade policies as factors contributing to the weaker outlook.

Disruptions to international trade and energy markets can increase production and transportation costs, affecting businesses and consumers across national borders.

Higher energy prices can also place pressure on countries that depend heavily on imported fuel and other essential commodities.

Financial instability presents another challenge, particularly for developing economies facing high borrowing costs and limited access to affordable international capital.

Where governments must devote substantial resources to debt servicing, less funding may be available for infrastructure, healthcare, education and other development priorities.

UNCTAD warned that these pressures could deepen existing inequalities between countries with strong financial systems and those facing more restrictive economic conditions.

Technology Gap Could Widen Economic Inequality

Beyond immediate economic pressures, the report raised concerns about unequal access to advanced technologies and high-value industrial opportunities.

UNCTAD observed that developing economies increasingly face barriers to entering industries shaped by sophisticated technology, substantial investment and specialised manufacturing capabilities.

These challenges could limit their ability to benefit from emerging sectors and global industrial transformation.

Countries with advanced technological infrastructure are better positioned to attract investment in high-value production and innovation.

By contrast, economies dependent on raw-material exports or lower-value manufacturing may struggle to secure a larger share of global economic activity.

The report stressed that development prospects would increasingly depend on countries' ability to strengthen productive capacity, acquire technology and participate more effectively in international value chains.

Without deliberate investment in infrastructure, technical education and domestic industries, existing technological disparities could become more difficult to overcome.

Declining Development Assistance Raises Fresh Concerns

UNCTAD also projected a further decline in official development assistance, adding to financing pressures confronting poorer countries.

Official development assistance generally includes concessional funding and other support provided to eligible developing countries and multilateral institutions for development purposes.

Such assistance can support essential programmes involving healthcare, education, infrastructure and poverty reduction.

A sustained decline could place additional pressure on countries that rely on external financing to complement domestic resources.

The report did not specify, in the information provided, the projected value of the reduction or identify which countries would face the largest losses.

Nevertheless, the warning highlights the importance of strengthening domestic revenue systems and improving access to sustainable development financing.

What the Outlook Means for Nigeria and Africa

The global slowdown has implications for Nigeria and other African economies seeking to expand manufacturing, improve infrastructure and create employment.

Changes in international financing conditions can affect investment decisions, borrowing costs and the availability of capital for development projects.

Similarly, weaker global demand and trade disruptions may influence export earnings and business activity.

For Nigeria, economic diversification remains important to reducing vulnerability to external shocks and strengthening domestic production.

Investment in agriculture, manufacturing, energy infrastructure and technological capabilities could help improve productivity and create employment opportunities.

However, the UNCTAD figures do not constitute a specific forecast for Nigeria, and the report's global projections should not be interpreted as evidence of the country's expected growth rate.

The wider message is that developing economies need stronger productive institutions and more resilient economic structures to withstand international uncertainty.

UN Calls for Regional Integration and Industrial Investment

To address the challenges, UNCTAD advocated stronger regional economic integration, increased investment in productive industries and greater international cooperation.

Regional integration can help developing countries expand market access, improve trade connections and create opportunities for industrial development.

For African economies, stronger regional production networks could support manufacturing, agricultural processing and the movement of goods and services across borders.

However, effective integration requires reliable infrastructure, reduced trade barriers and coordinated policies.

UNCTAD also emphasised the importance of investment in industries capable of generating employment, strengthening technological capabilities and increasing domestic economic value.

International cooperation, the agency argued, remains essential to ensuring that emerging technologies and changing global trade arrangements do not further disadvantage poorer countries.

Growth Alone Is Not Enough

The UN's latest outlook highlights a difficult economic environment in which developing countries must pursue growth while confronting financial pressures and widening technological gaps.

Although global output is still projected to expand in 2026, the expected slowdown could complicate efforts to reduce poverty and improve living standards.

The report also reinforces the importance of examining how economic growth is distributed.

Higher national output does not automatically guarantee better wages, affordable essential services or improved opportunities for disadvantaged communities.

For developing countries, the challenge is therefore not simply to restore faster growth but to build economies capable of generating productive employment, strengthening domestic industries and sharing economic opportunities more widely.

UNCTAD's warning places renewed attention on the need for policies that connect investment, technological development and regional cooperation with measurable improvements in people's lives.

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