Trend World economy stays on a sub-par growth path under overlapping shocks

Summary

KIEP characterises the 2026 world economy as caught between overlapping shocks and narrowing exits. Three forces are named as combined downside factors: a prolonged Middle East energy shock, trade uncertainty that lingers even after US reciprocal tariffs were ruled unlawful, and heavier fiscal burdens with unstable government bond markets. The baseline already builds in part of the energy price rise and trade uncertainty, while a longer or more intense shock is assessed separately as downside risk. Global growth of 3.0 percent in 2026 would stay under the pre-pandemic ten-year average of 3.7 percent. The institute therefore treats slow growth as a continuing condition rather than a one-year dip.