The Regions of 2026

For the Global South, this regionalisation is not a retreat. It is a reordering of opportunity and risk.

This article offers a desk-ready synthesis of the five regions that will shape the Global South in 2026: Africa, Asia, Latin America, the Gulf, and the Indian Ocean. It does not repeat country forecasts already published elsewhere in The World Ahead. Instead, it distils structural forces that cut across borders: fiscal capacity, demographics, commodities, capital flows and geopolitics.

Africa 2026: Growth Without Cushion

Africa remains the fastest-growing region demographically and among the most constrained economically.

The IMF projects sub-Saharan Africa's aggregate GDP growth at around 3.8 percent in 2025 and 4.0 percent in 2026, broadly in line with recent trends but masking sharp divergences. Resource-rich exporters such as Nigeria and Angola benefit from energy demand, while import-dependent economies face persistent FX stress and debt service pressure. Kenya's debt-service-to-revenue ratio hovers near 40 percent; Egypt's external financing needs exceed reserves comfortably.

Structural features defining 2026 include high population growth with limited formal job creation, thin tax bases and elevated interest burdens, rising climate exposure affecting food and infrastructure, and heavy reliance on multilateral and Gulf financing.

Several African states are no longer in acute crisis, but few have rebuilt fiscal buffers. Debt restructurings in Ghana (defaulted 2022, external debt about $13 billion) and Zambia (defaulted 2020, external debt around $13 billion) may stabilise balance sheets by late 2026, but market access will remain selective and conditional. Ethiopia negotiated a restructuring framework in November 2024 after suspending payments on a $33 billion external debt stock.

Africa's opportunity lies not in headline growth, but in selective execution: logistics corridors (notably Lobito in Angola, Lamu in Kenya), energy transition minerals (cobalt, copper, lithium), agribusiness and digital services. The risk lies in political slippage that converts fiscal adjustment into social instability, as seen in Kenya's June 2024 protests over tax increases.

Asia 2026: The Engine With Internal Fault Lines

Asia remains the growth core of the Global South, but its internal composition is changing.

The IMF expects India's GDP growth around 6.5 percent in 2025-26, making it one of the fastest-growing major economies, supported by strong investment and domestic demand. Southeast Asia (Indonesia, Vietnam, Philippines) is projected near 5 percent growth, attracting manufacturing, capital and labour migration as firms diversify supply chains. China's growth, as discussed elsewhere in this edition, is projected at 5.0 percent in 2025 and 4.5 percent in 2026: upward revisions, but with persistent deflationary pressures (0 percent inflation in 2025) and a current account surplus of 3.3 percent of GDP signaling incomplete rebalancing.

Key regional dynamics include manufacturing diversification beyond China ("China+1" strategies shifting production to Vietnam, Indonesia, India); strong domestic demand in South and Southeast Asia; property and local-government stress in China (with LGFV debt estimated at $9-13 trillion); and rising geopolitical exposure in East Asian trade routes, particularly the South China Sea and Taiwan Strait.

Asia's challenge in 2026 is not momentum but balance. Growth remains robust, yet vulnerabilities (debt in China, FX sensitivity in frontier Asian economies such as Pakistan and Bangladesh, energy dependence across the region) limit upside. Pakistan's IMF programme ($7 billion EFF approved April 2024) unlocked $1.2 billion in December 2024 after completing the second review, but reserves remain at around $14 billion (roughly two months of import cover). Bangladesh faces tightening external conditions despite its garments-export success, with reserves under pressure and governance transitions creating uncertainty.

Asia will continue to outperform globally, but it will do so with tighter margins and higher policy stakes.

Latin America 2026: Stability, Not Take-Off

Latin America enters 2026 in a relatively improved macroeconomic position, largely because it tightened early.

Central banks in Brazil, Chile, Colombia and Mexico were among the first globally to raise rates in 2021-2022, and by late 2024 began cautious rate cuts as inflation normalised from double-digit peaks back toward target ranges. Brazil's policy rate, which peaked above 13 percent, has been cut gradually as inflation fell below 5 percent. Mexico maintains high real rates amid decent growth and benefits from nearshoring links to North America. Commodity exports, particularly from Brazil (agriculture, iron ore) and Chile (copper), provide a cushion.

Yet constraints remain: low productivity growth (regional average well below 1 percent annually over the past decade), political fragmentation and reform fatigue (fiscal reforms stalled in several countries), and fiscal rigidity despite stabilising debt ratios (interest payments consume significant shares of revenue).

Latin America's outlook is neither boom nor bust. It is defined by managed stability: attractive for yield-seeking capital (local-currency bonds offer positive real returns), less compelling for transformational growth. The region benefits from credible central banks, functioning local bond markets and reasonably predictable inflation dynamics, making it the "relative safe haven" within the Global South.

The Gulf 2026: Capital Surplus, Strategic Ambition

The Gulf enters 2026 as one of the most influential capital allocators in the Global South.

Energy revenues, sovereign wealth funds and geopolitical positioning allow Gulf states to shape infrastructure, logistics and technology investment far beyond their borders. Saudi Arabia's Public Investment Fund, UAE's ADQ and Mubadala, and Qatar's QIA are now among the most active financiers of ports, data centres, renewables and logistics across Africa, Asia and the Indian Ocean region.

Defining traits include large fiscal and current account surpluses (Saudi Arabia and UAE both run substantial surpluses when oil prices remain above $70-80 per barrel), expanding influence in Africa (ports, agriculture), South Asia (infrastructure, energy) and the Indian Ocean (strategic positioning), and aggressive diversification strategies under Vision 2030 (Saudi Arabia) and UAE industrial policy.

The Gulf's risk is not solvency but execution. Megaprojects require disciplined sequencing, labour markets remain heavily dependent on expatriate workers, and long-term energy transition pressures loom. Still, in a fragmented world, liquidity equals leverage and the Gulf has both. When Ghana and Zambia negotiate restructurings, Gulf states appear as creditors and potential new financiers. When African governments seek alternatives to traditional lenders, Gulf funds often provide the capital.

The Indian Ocean 2026: The Overlooked Strategic Theatre

The Indian Ocean is no longer peripheral. It is a connective system linking Africa, Asia and the Gulf.

Shipping lanes (carrying roughly 80 percent of global oil trade and a third of bulk cargo), energy routes, submarine cables (over 95 percent of global internet traffic) and port infrastructure have elevated the strategic value of island and littoral states, from Mauritius to Sri Lanka to the Maldives to the Horn of Africa.

Key pressures include external debt exposure (Sri Lanka defaulted in 2022 on roughly $50 billion external debt, negotiated IMF programme, restructured with bilateral creditors including India and China), import dependency (most small island states import over 80 percent of goods), and great-power competition through infrastructure and security agreements (China's Belt and Road ports in Sri Lanka, Pakistan; India's security partnerships in Maldives, Mauritius, Seychelles; UAE and Saudi investments in Horn of Africa ports).

For small states, 2026 is about navigation: diplomatic, financial and strategic. Alignment choices are less ideological than transactional: whoever provides the best financing terms, infrastructure support and market access often wins influence. Mauritius balances relations with India, China and Western partners; Maldives has oscillated between India-first and China-friendly governments. Survival depends on diversification, not allegiance.

Regional Crosscurrents to Watch

Across regions, five forces dominate.

First, debt overhangs interacting with climate shocks. Countries with high debt service burdens (Pakistan, Kenya, Egypt) are least able to absorb climate-related fiscal costs, whether floods, droughts or storms, which the IMF estimates can reduce GDP by 1-5 percent in severe cases and increase deficits by 0.7-3 percent of GDP per event.

Second, fragmented capital flows replacing universal market access. Traditional Wall Street-centered capital allocation is giving way to regional financing ecosystems: Gulf sovereign funds in Africa and South Asia, China's Belt and Road restructurings in Asia and Africa, private credit funds filling gaps left by commercial banks, multilateral lenders (IMF, World Bank) remaining central but no longer dominant.

Third, demographic pressure without matching investment in skills. Africa's median age (19-20 across much of the continent) creates potential for a demographic dividend, but only if education systems produce employable graduates and economies create formal jobs. Current trends show youth unemployment exceeding 20 percent in many countries: a recipe for instability if not addressed.

Fourth, energy transition reshaping trade and fiscal models. Copper, lithium, cobalt and nickel demand is rising for batteries and renewable energy infrastructure, benefiting exporters (Chile, DRC, Indonesia) but creating new concentration risks. Oil exporters face long-term revenue questions even as short-term prices remain supportive.

Fifth, security risks bleeding into economic policy. Red Sea shipping disruptions (Houthi attacks on commercial vessels in 2023-24), South China Sea tensions, Sahel instability and Horn of Africa conflicts are not external shocks: they directly affect trade costs, insurance premiums, investment decisions and fiscal priorities.

Regions that manage these intersections well will stabilise. Those that do not will oscillate between reform and relapse.

Why Regions Matter More Than Ever

Global averages conceal more than they reveal. The IMF projects emerging and developing economies to grow around 4 percent in 2025-26, but this headline masks 8 percent growth in India, 5 percent in Indonesia, 3 percent in Nigeria (far below potential given population), near-zero or negative growth in some fragile states, and slowing but still-solid 4-5 percent in China.

In 2026, risk travels regionally: through trade routes, currencies, food prices and migration corridors. A debt default in one country raises borrowing costs for neighbours. A drought in East Africa drives food imports across the region. A currency crisis in Egypt affects remittance flows to Sudan and Jordan. These are regional systems, not isolated events.

Understanding the Global South now requires a regional lens: one that captures spillovers, financing ecosystems and shared constraints. This synthesis provides that lens. The next step is not prediction, but application: using these regional realities to guide policy, capital and strategy.