The two deepest global recessions since 1960 occurred in 2009 and 2020. The recovery from the latter has been the strongest of all: within five years, global GDP per head is 10 per cent above its 2019 level. The recovery in high-income economies has been faster than after the previous recessions. While the recovery of emerging market and developing economies (EMDEs) has been faster than in high-income countries, it has been far slower than in 2010-14. <\/p>\n
More worryingly, a large number of individual developing countries have performed very poorly in the more recent period: by 2025, GDP per head in nearly 90 per cent of high-income economies had surpassed its 2019 level; in contrast, it remained lower than in 2019 in more than one-quarter of EMDEs and in 40 per cent of low-income countries. Worse still, the decline in the proportion of the population in extreme poverty in the poorest countries has halted over the past decade. This really ought to matter to policymakers worldwide. The massive decline in the proportion of the world\u2019s people in extreme poverty was a huge gain.<\/p>\n
![\"Saudi](\"https:\/\/www.newsbeep.com\/ie\/wp-content\/uploads\/2026\/01\/CFXKDOFILHYRXWTDWTSTY4YWBQ.jpg\")
Saudi Arabia’s Foreign Minister Faisal bin Farhan (L) and Turkey’s Foreign Minister Hakan Fidan join US president Donald Trump at the\u00a0World Economic Forum on January 22, 2026 in Davos, Switzerland. Photograph: Chip Somodevilla\/Getty Images <\/p>\n
[\u00a0Trump drops tariff threat over Greenland after \u2018very productive meeting\u2019 with NatoOpens in new window<\/a>\u00a0]<\/p>\n Yet who cares in today\u2019s more openly predatory world? Probably not many of those in Davos. So, let us turn to what does matter to them: global economic prospects in a world subject to the whims of Trump. <\/p>\n The IMF\u2019s recent World Economic Outlook is comforting. It says that \u201cglobal growth is projected to remain resilient at 3.3 per cent in 2026 and at 3.2 per cent in 2027: rates similar to the estimated 3.3 per cent out-turn in 2025\u201d. This forecast marks a small upward revision for 2026 and no change for 2027 compared with October 2025. On balance, accommodative monetary and fiscal policies, buoyant stock markets and AI<\/a> euphoria have offset both Trump-induced uncertainty and the negative impact of tariffs, themselves substantially less aggressive than indicated on \u201cliberation day\u201d last April.<\/p>\n So, is the Trump era, albeit all the noise, \u201ca tale told by an idiot, full of sound and fury, signifying nothing\u201d, at least where the economy is concerned? He has learnt that he cannot bully China. He believes he can bully everybody else and nothing, so far, suggests he is wrong. The cost of his expeditions to Venezuela and other such ventures seems modest. In all, the upside may be small, but the downside may be small, too: his bark is worse than the bite.<\/p>\n Yet my guess is that this complacency is mistaken. What we are seeing is a slow-motion erasure of the operating systems of the global economic and political orders.<\/p>\n Thus, with the US neither predictable nor bound by any fundamental principles of action, apart from some short-term gains, its credibility as a reliable partner and ally is being destroyed, perhaps permanently. Domestically, the rule of law, fiscal stability, the independence of the Federal Reserve (and so monetary and financial stability) and the commitment to science are all in question. Internationally, the US is mounting a war on almost all significant institutions, notably the EU. The World Trade Organization has been made irrelevant. Co-operation on climate and health is ruined. In all, the administration has announced its decision to pull out of a total of 66 international organisations, including 31 UN entities.<\/p>\n It is possible that even such an unco-operative and unstable environment will not impair the willingness of business and policymakers to take big bets on the future. Look at the AI boom. But this must be doubted. The costs may not come swiftly or even visibly. Yet we know that populist policies erode domestic economic performance. The same is sure to be true when the regime in question is a global superpower. But, in this case the damage will be to the world economy, too, as we lose a host of global public goods. Casualties might well include the global roles of the dollar and the US financial system.<\/p>\n At the same time, as the recovery from the pandemic tells us, the world economy has great momentum: it has, after all, grown substantially in every year since 1950. Important innovations come apace, not just in the US, but also elsewhere. Adam Smith famously said that \u201cthere is a great deal of ruin in a nation\u201d. He was right. But it would be grotesque to test this optimistic view to the point of US and global destruction. \u2013 Copyright The Financial Times Limited 2026<\/p>\n