NEW YORK / ISTANBUL

The global economic growth estimates for 2026 remain below the pre-pandemic average, and without decisive policy steps, the global economy may fall into “a persistently slower growth path,” UN Under-secretary-general for economic and social affairs told Anadolu.

Li Junhua stated that the global economy is expected to grow 2.7% this year and 2.9% in 2027, which is below the pre-pandemic average of 3.2% in 2010–2019, citing the UN’s World Economic Situation and Prospects report released this month.

“This subdued growth outlook increasingly reflects deep-rooted structural constraints rather than cyclical weakness,” Li told Anadolu.

He said weak investment remains a key pressure on the global economy, noting that foreign direct investment has been particularly sluggish in developing countries. While artificial intelligence offers significant productivity gains, he added, the benefits remain concentrated in a small number of large economies.

Li mentioned that high public debt has led to massive interest burdens, with interest payments constituting increasingly larger shares of national budgets, hindering spending on infrastructure, human capital, and climate resilience.

He added that structural problems such as weak investments, limited policy space, uneven technological distribution, and rising climate risks will shape the global growth path beyond 2026.

“Without decisive policy action to boost investment, build resilience, and enable broader technological participation, there is a growing risk that the global economy could settle into a persistently slower growth path than in the pre‑pandemic era,” he said.

- ‘Renewed trade tensions remain key concern’

Li said downside risks to the global outlook remain, while the renewed trade tensions pose a “key concern,” despite the easing of some trade disputes between the US and its major trading partners over the past year via bilateral agreements. He added that uncertainties remain due to the change of trade and industrial policies.

He noted that fiscal and financial vulnerabilities pose another significant risk, as many developed and developing countries face high public debt and increasing borrowing costs.

Li added that tight global financial conditions give way to more rollover risks and external financing pressures.

“A sudden shift in investor sentiment could trigger capital outflows from vulnerable economies, intensify exchange‑rate pressures, and expose underlying balance‑of‑payments weaknesses,” he said.

Li also warned that concerns over potential overvaluation in global stock markets are growing, noting that major indexes reached record levels in 2025 amid optimism over AI-driven productivity gains and strong earnings projections. He noted that if these expectations are not met, a correction may have to be made, and that would come with global repercussions.

He added that persistent and unbalanced inflation dynamics add another risk, as the underlying price pressures in some items could get even worse in geopolitical fragmentation, trade disruptions, or climate change-induced supply shocks.

- Multilateral cooperation remains ‘crucial to support economic stability’

Li stated that there are some policy opportunities to help mitigate risks.

“At the domestic level, governments can strengthen coordination among monetary, fiscal, and industrial policies to balance price stability with growth and employment objectives,” he said. “Such coherence can help anchor inflation expectations, foster investment in productive capacity and innovation, and enhance supply‑chain and labor‑market resilience.”

“At the international level, reinvigorating multilateral cooperation is crucial to support economic stability and strengthen sustainable and inclusive global growth,” he noted.

Li emphasized that accelerating joint efforts in trade, development finance, tech governance, and climate action could help address debt vulnerabilities, mobilize long-term investments, and close structural divides between countries, while a renewed commitment to cooperative frameworks could lay the foundation for a resilient global economy.

- Uneven growth expected

Li stated that global growth is expected to remain uneven in 2026 due to differences in economic structures, exposure to external factors, and divergence in current policy spaces.

He said East and South Asia remain among the most resilient developing regions, while growth prospects in West Asia have improved following easing OPEC+ production cuts and expansion in some non-oil sectors.

Li stated that the region remains highly sensitive to geopolitical tensions undermining investor confidence and disrupting trade and financial flows.

Growth in Latin America and the Caribbean is expected to remain moderate and stable, while many African countries continue to face structural vulnerabilities including high inflation, debt burdens, falling aid, and conflict-induced disruptions, despite growth conditions gradually improving in the continent.

- Türkiye outlook

As for Türkiye, Li said the country’s real gross domestic product growth is expected to be at 3.9% in 2026 and 4.1% in 2027, showing a more resilient domestic economic structure.

“The upward revision to Türkiye’s growth outlook reflects stronger domestic demand and faster improvements in financial conditions than previously expected,” he said, noting that falling inflation and a gradual decline in interest rates are supporting credit expansion and private consumption.

He said household spending in Türkiye remained strong, while construction and investment activities were reinforced by favorable credit conditions and ongoing policy support.

At the same time, positive internal dynamics have more than offset the weak external demand due to sluggish growth in the EU and ongoing global trade tensions, which further propelled the momentum in the Turkish manufacturing industry.

Geopolitical tensions in countries such as Venezuela and Iran have heightened global uncertainty, putting additional pressure on economic activity.

“Even without major supply disruptions, increased uncertainty can amplify market volatility, making it harder for policymakers to manage inflation and support growth,” he said.

Both Venezuela and Iran boast large crude oil reserves, but their actual production remains limited.

Li said Iran accounted for about 4% of the global crude oil production by the end of 2025, while Venezuela made up about 1% over the same period.

He mentioned that global oil prices have recently declined due to rising supply, easing production cuts, and weaker-than-expected demand, especially in major markets such as China.

He added that any production changes by either Venezuela or Iran could have only a limited impact on global prices.