India to be fastest-growing large economy at 7.3% in 2026 as global trade slows to 4%, says UNCTAD

New Delhi: Global trade is expected to grow 4% in 2026 "well above what was anticipated when the conflict in the Middle East began" but slower than the 4.4% expansion last year, the UN Trade and Development (UNCTAD) said Friday.

In its 2026 Trade and Development Report, the UNCTAD said this year, higher trade values are being driven by price increases as energy shocks and export controls, investment screening and supply chain conditions are making strategic sectors harder for new entrants to access.

Also read: World economic growth to slow to 2.6% in 2026, UN trade body says


Global trade reached a record $35 trillion in 2025. While trade between China and the US has fallen by more than 20% since 2024, East Asia expanded trade with both China and North America in this period. "Trade has proven more resilient than expected, but growth teeters on a narrow base," said UNCTAD. "Global trade grew 4.4% in real terms in 2025 and should expand about 4% in 2026, well above what was anticipated when the conflict in the Middle East began." The report highlighted that governments increasingly use industrial, trade, financial and technology policies to pursue economic and national security objectives. Market access and the ability to move into higher-value activities now depend more heavily on technology, finance and geopolitics.

"Artificial intelligence products, comprising advanced computing equipment deployed primarily in new data centres, have become the main driver of merchandise trade; 82% of value added accrues to four supplier segments in this category," it said. On AI, UNCTAD pointed out that the apparent resilience, however, masks wide differences across countries and sectors. Only a few economies are benefiting from the current AI boom, it said.

The divide compounds longstanding structural challenges in terms of financialisation, inequality, fiscal conservatism and climate change. Issues advancing faster than multilateral rule-making have pushed governments towards unilateral measures, preferential agreements and plurilateral initiatives, according to the UN trade and development body.

Further, the expiration or non-renewal of major preference schemes, together with the increasing use of unilateral tariffs, have abruptly raised the applied tariffs faced by vulnerable exporters. "The impact is likely to be greatest where countries are highly dependent on a single preference-granting market, have concentrated export structures, or export manufactured or agricultural goods facing high most-favoured nation tariffs," it said. Strategic investment is concentrated in Europe (28.4%) and North America (28%), according to the report. Even among developing economies, capital is primarily funnelled into developing Asia (26.5%) with China, India, Indonesia, Malaysia and Singapore as the leading jurisdictions for new investments.

Slow growth

The global economy will likely grow 2.6% in 2026, slowing from a 2.9% expansion last year. However, developing economies are projected to grow 4% this year, slower than 4.7% in 2025, it said. Asia is projected to contribute 59% of global growth this year. "Growth in the developing world is bifurcating," UNCTAD said in the report. "A few large economies are driving global expansion, with India fastest among them at 7.3% in 2026," it said.