By R Anil Kumar
Bengaluru, Oct 9, 2026.
Economic Development: World trade reached a record $35 trillion in 2025 – but developing countries were held back from greater participation in the global economy because of new technological and policy barriers, the UN trade and development agency UNCTAD said on October 9.
“Only a fraction of investment by companies is now driven by traditional concerns such as low labour costs,” said senior UNCTAD official, Anastasia Nesvetailova.
“Instead, value is moving into strategic sectors, semiconductors, artificial intelligence, clean energy, advanced computing, where the barriers to entry are high and rising.”
Access issues
The agency identified increasing export controls, investment screening and supply-chain pre-conditions as the reasons why strategic sectors were harder for developing countries to access.
Turning to this year, UNCTAD said that higher trade values continue to be driven by price hikes linked to the global energy shock caused by the US-Iran war.
The global trade map is also shifting, with trade between China and the United States falling by more than 20 per cent since 2024.
Meanwhile, East Asian countries have expanded their trade links with both China and North America.
Asia: Growth engine
“Even as the (global) economy slows, Asia will contribute 60 per cent of global growth this year,” Ms. Nesvetailova explained. “The fastest expanding economies include China, India, Indonesia, Kyrgyzstan, Mongolia, Tajikistan, Uzbekistan, and Vietnam.”
Global South slips behind
Apart from a handful of Asian economies, most of the Global South is falling further behind, UNCTAD maintained. And as their growth slows, financial risks are mounting and development finance is under strain, the agency said.
In support of trade in developing countries, UNCTAD called for support for domestic industries over the long term, training, research and foreign investment tied to local suppliers.
Global trade to grow 4% in 2026, slower than 4.4% in 2025: UNCTAD
Global trade growth will slow to 4% in 2026, down from 4.4% in 2025, according to the latest UNCTAD Trade and Development Report 2026. Despite hitting a record $35 trillion in 2025, the expansion in 2026 faces significant headwinds from a persistent energy shock and escalating geoeconomic shifts.
Key Economic Projections
The deceleration in trade mirrors a broader downshift in the global economy.
Global GDP Growth: Expected to drop to 2.6% in 2026, down from 2.9% in 2025.
Developing Economies: Growth will ease to 4% (compared to 4.7% last year).
The Asian Engine: Asia is set to drive 59% of all global growth in 2026, led by India as the fastest-growing large economy at 7.3%.
Top Drivers & Core Risks
The report highlights a fragile foundation for current global trade:
The AI Concentration: Artificial Intelligence-related hardware (chips and servers) has become the primary engine of merchandise trade, comprising one-sixth of global goods trade value and driving 42% of its growth. UNCTAD warns that any slowdown in AI demand could abruptly stall trade momentum.
Energy and Geopolitics: Surging energy prices triggered by the Middle East crisis are artificially inflating trade values while real volume growth remains weak.
Shifting Trade Corridors: Traditional trade maps are fracturing. Trade between China and the US has plunged by more than 20% since 2024, pushing East Asia to step up as a vital connector corridor expanding trade with both powers.
Protectionist Barriers: Rising unilateral tariffs, rigid export controls, and intensive investment screening are increasingly locking out new market entrants from strategic global supply chains.
