The latest regional outlooks reveal an increasingly uneven global economy. Asia-Pacific, which expanded by 5% last year, is now expected to slow to 4.8% in 2026 before easing further to 4.4% in 2027. Yet the downgrade is less severe than earlier projections suggested, and the reason is striking: demand tied to artificial intelligence has helped offset broader weakness. Advanced economies in the region are forecast to accelerate to 3.2% growth, while emerging Asia slows to 5.1% as higher energy prices weigh on activity.
The improvement in Asia carries risks. The outlook warns that the energy shock linked to the Iran war, a possible correction in the AI investment boom, and rising bond yields in the United States, United Kingdom, euro zone and Japan could all undermine momentum. Policymakers are also being urged to remain alert to inflation. Central banks, the assessment suggests, should be prepared to tighten policy again if price pressures prove persistent rather than temporary.
Sub-Saharan Africa presents a more resilient picture, though not an entirely comfortable one. Growth is projected to hold at 4.5% this year and next, a modest upgrade from earlier expectations. But inflation is forecast to climb from 3.4% in 2025 to 4.3% in 2026 and 5% in 2027, raising the prospect that many countries will need to tighten monetary conditions. The region’s internal differences are also widening: Nigeria’s outlook has improved on stronger oil revenue, while South Africa is expected to grow far below the regional average.
The Middle East, North Africa and Pakistan region faces the sharpest reversal. After growing 3.3% in 2025, it is projected to contract by 1.3% this year, with Bahrain, Iraq, Kuwait and Qatar facing double-digit contractions and Saudi Arabia expected to shrink by 3.3%. A strong but uneven rebound of 6.6% is anticipated in 2027. Officials caution that pre-war surpluses and inventory drawdowns only bought time against the disruption to the Strait of Hormuz, warning that renewed disruption could trigger much larger price adjustments.
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