LONDON — Leading economists from ten major economies paint a picture of cautious resilience for 2026, projecting moderate global growth around 2.7-3.2% amid persistent uncertainties over trade policy, artificial intelligence adoption, and geopolitical fragmentation that could significantly alter trajectories in either direction.

The consensus reflects a world economy caught between competing forces: technological optimism and productivity gains from AI, versus protectionist policies and structural headwinds. Regional divergences are widening, with the United States maintaining exceptionalism while Europe and Japan lag, and emerging markets face varied prospects depending on their exposure to global trade tensions.

United States: Resilience Despite Headwinds

Seth Carpenter, Chief Global Economist, Morgan Stanley (USA)

Carpenter forecasts US GDP growth of 1.8% in 2026 and 2.0% in 2027, driven by strong household finances and continued business investment in artificial intelligence. The US economy may slow notably in the first two quarters of 2026 but reaccelerate in the second half, helped by easier monetary and fiscal policy.

"These two factors—strength in consumption and business spending—were why we never called for a recession early in 2025, when markets pulled back on trade policy fears," Carpenter explains. "The U.S. remains the most likely economy to drive material upside to global growth."

He notes that while uncertainty remains high, consumer demand or AI-driven productivity could boost growth above baseline forecasts. The Federal Reserve is expected to reduce rates through April 2026, assuming job growth remains slow and any rise in core inflation stays modest. However, tariffs could push core PCE inflation higher in the first quarter before resuming its gradual descent.

China: Manufacturing Export Strategy

Andrew Tilton and Hui Shan, Economists, Goldman Sachs (China Focus)

Tilton and Shan project China's economy will grow 4.8% in 2026, significantly above consensus estimates, helped by government determination to advance manufacturing competitiveness and boost exports. This represents an upward revision from their previous 4.3% forecast.

China's real export growth is now expected at 5-6% annually for the next few years, up from previous forecasts of 2-3%, as Chinese goods gain global market share. The economists cite approval of China's 15th Five-Year Plan, covering 2026-2030, which calls for upgrades to traditional industries and growth in emerging sectors including new energy.

The property downturn will enter its fifth year in 2026, but its drag on growth should shrink as new housing starts are 75% below peak levels. Even if the rate of decline remains constant, the impact on the economy should become smaller. The researchers maintain forecasts for monetary easing with two 10-basis-point cuts in 2026, accompanied by fiscal expansion and credit growth acceleration.

United Kingdom: Below-Target Inflation Persists

James Pomeroy, Global Economist, HSBC (UK)

Pomeroy anticipates the Bank of England will bring interest rates down to 2.75% in 2026 before pausing, on evidence of a softening economy and lower inflation. The UK faces a delicate balancing act between supporting growth and maintaining price stability.

UK economic growth is projected to remain modest, constrained by fiscal consolidation pressures and structural productivity challenges. The labor market shows signs of cooling, with wage growth moderating from elevated levels. However, services inflation remains sticky, complicating the Bank of England's policy decisions.

Brexit-related trade frictions continue to weigh on UK exports, particularly to European markets. The economist notes that while the immediate disruption from Brexit has passed, longer-term impacts on supply chains and investment decisions persist. The UK's challenge is navigating these structural changes while maintaining competitiveness in key sectors including financial services and technology.

Germany: Fiscal Support Meets French Consolidation

Holger Schmieding, Chief Economist, Berenberg Bank (Germany)

Schmieding projects eurozone growth at 1.1% in 2026 and 1.3% in 2027, with German fiscal support partially offset by consolidation in France and Italy. Germany's announced infrastructure and defense spending package could provide meaningful support to eurozone growth, though implementation timelines remain uncertain.

The German economist emphasizes that manufacturing weakness, particularly in automotive and industrial equipment sectors, continues to challenge the German economic model. Energy costs remain elevated compared to pre-2022 levels, affecting industrial competitiveness. However, investment in green technologies and digital infrastructure offers potential for structural improvement.

Schmieding anticipates the European Central Bank will implement two rate cuts in 2026, bringing the policy rate down to 1.5% by midyear, as slow growth and slack in the eurozone economy combine with inflation running below target. The challenge for policymakers is supporting growth without compromising hard-won inflation credibility.

India: Tech Sector and Domestic Demand

Radhika Rao, Senior Economist, DBS Bank (India/Singapore)

Rao forecasts India's economy will grow 6.5-6.8% in 2026, supported by strong domestic consumption, government infrastructure spending, and recovery in IT sector hiring as US Federal Reserve rate cuts boost technology budgets. India stands as one of the fastest-growing major economies, though challenges persist.

The economist highlights that India benefits from its positioning in global supply chain diversification, as companies seek alternatives to concentrated manufacturing bases. Foreign direct investment in manufacturing, particularly in electronics and pharmaceuticals, continues expanding. However, inflation volatility related to food prices remains a concern for the Reserve Bank of India.

Rao notes that India's IT sector, which derives over 60% of revenue from US clients, should see 15-20% job growth in 2026 as American corporate tech spending recovers. This creates positive spillover effects for domestic consumption and services sectors. The challenge is ensuring inclusive growth that reaches rural areas and addresses employment quality beyond headline job creation numbers.

Japan: Gradual Normalization Path

Takeshi Yamaguchi, Chief Japan Economist, Morgan Stanley (Japan)

Yamaguchi projects modest growth for Japan around 1.0% in 2026, with the Bank of Japan remaining the only major developed market central bank hiking rates. The BOJ is likely to increase its policy rate to 0.75% by December 2025 in the baseline forecast, then remain on hold in 2026, with potential resumption of hikes in 2027 bringing the rate to 1.25%.

Japan faces the challenge of normalizing monetary policy after decades of ultra-loose conditions, while managing the impact on heavily indebted government finances. Inflation has been above the 2% target for recent quarters, but underlying trends remain weaker, prompting caution about aggressive tightening.

The economist notes that wage growth is finally picking up after years of stagnation, supported by labor shortages in an aging society. This creates a virtuous cycle where rising wages support consumption, which in turn sustains inflation. However, export competitiveness faces challenges from yen appreciation and intensifying competition from Chinese manufacturers in key markets.

Singapore: Trade Hub Navigates Fragmentation

Irvin Seah, Senior Economist, DBS Bank (Singapore)

Seah forecasts Singapore's economy will grow 2.5-3.0% in 2026, navigating challenges from global trade fragmentation while benefiting from its role as a regional business hub and gateway to Southeast Asia. Singapore's open economy makes it particularly sensitive to global trade dynamics.

The economist emphasizes that while trade tensions create headwinds, Singapore benefits from its diversified trade relationships and strong institutional framework. Investment in digital infrastructure, biotechnology, and green energy positions Singapore as a regional innovation center. However, the small city-state cannot escape global slowdowns entirely.

Seah notes that Singapore's financial services sector continues attracting regional headquarters and wealth management operations, partly due to geopolitical uncertainties in Hong Kong. The Monetary Authority of Singapore is expected to maintain a gradual appreciation bias for the Singapore dollar to contain imported inflation, though the pace may moderate given external uncertainties.

Brazil: Commodity Cycles and Fiscal Pressures

Carlos Thadeu de Freitas, Chief Economist, Itaú Unibanco (Brazil)

De Freitas projects Brazil's economy will grow 2.0-2.3% in 2026, supported by agricultural exports and commodity demand but constrained by fiscal challenges and elevated interest rates. Latin America's largest economy faces the challenge of balancing inflation control with growth support.

The economist highlights that Brazil's central bank has successfully reduced inflation from double-digit levels, but core inflation remains sticky. Interest rates may remain elevated through much of 2026, creating headwinds for domestic demand and investment. Political uncertainty surrounding fiscal policy adds another layer of complexity.

De Freitas notes that Brazil benefits from global demand for food, biofuels, and minerals, particularly from Asian markets. However, the country needs structural reforms to improve productivity and infrastructure to fully capitalize on these opportunities. Currency volatility related to US dollar strength and domestic political developments remains a concern for investors.

Australia: Resources Boom and Chinese Demand

Sarah Hunter, Chief Economist, BIS Oxford Economics (Australia)

Hunter forecasts Australia's economy will grow 2.3-2.5% in 2026, supported by resource exports to Asia and strong immigration-driven population growth. The Reserve Bank of Australia is expected to begin cutting rates in 2026 as inflation returns sustainably to the 2-3% target band.

The economist emphasizes that Australia's economic fortunes remain closely tied to Chinese demand for iron ore, coal, and liquefied natural gas. While diversification efforts continue, China accounts for roughly one-third of Australian exports. Any significant slowdown in Chinese construction or manufacturing would impact Australian growth prospects.

Hunter notes that Australia's housing market faces challenges from elevated prices relative to incomes and rising mortgage rates affecting household consumption. However, strong immigration and tight labor markets support wage growth and services sector expansion. The transition to renewable energy creates both opportunities in new industries and challenges for traditional resource sectors.

Middle East: Oil Recovery and Diversification

Khatija Haque, Chief Economist, Emirates NBD (UAE/Middle East)

Haque projects Middle East and North Africa regional growth will strengthen to 2.7% in 2025 and average 3.9% in 2026-27, mainly due to expansion of oil activity in oil-exporting nations. However, growth forecasts have been downgraded amid rising trade barriers affecting the region.

The economist highlights that oil-exporting nations benefit from elevated energy prices and OPEC+ production management, though the trajectory remains sensitive to global demand dynamics and US shale production. Non-oil sectors in Gulf Cooperation Council countries continue growing faster than oil sectors, reflecting diversification strategies.

Haque notes that oil-importing nations in the region face challenges from conflict-related disruptions and food price inflation. However, an assumed stabilization of armed conflicts and waning inflationary pressures should support growth recovery. The region benefits from increasing trade and investment ties with Asia, particularly China and India, reducing dependence on Western markets.

Cross-Cutting Themes: What Economists Agree On

Despite geographic and methodological differences, several common themes emerge from economists' 2026 forecasts:

Artificial Intelligence Impact: Nearly all economists cite AI as a wildcard that could boost productivity significantly, though timing and magnitude remain uncertain. The consensus suggests AI investments are driving capital spending but productivity gains may take several years to fully materialize.

Trade Policy Uncertainty: Economists across regions emphasize that elevated tariffs and protectionist policies create persistent headwinds. While an all-out trade war has been avoided, the shift toward economic nationalism represents a structural change from the globalization era.

Monetary Policy Convergence: Most major central banks are expected to move toward neutral policy rates in 2026, though the Bank of Japan stands as an exception with gradual tightening. The exact path matters less than fiscal policy surprises, according to multiple forecasters.

Fiscal Constraints: Advanced economies face growing concerns about debt sustainability, while emerging markets navigate the challenge of supporting growth without triggering currency crises. Fiscal policy, not monetary policy, emerges as the key swing factor for 2026 growth.

Regional Divergence: The gap between US economic performance and other major economies is expected to widen. China's growth trajectory depends heavily on policy support and export success. Europe faces structural challenges requiring longer-term reforms beyond cyclical policy adjustments.

Risks That Could Upend Forecasts

Economists identify several risk factors that could significantly alter baseline projections:

Upside Risks:

1. Faster AI productivity gains materialize sooner than expected
2. Trade policy uncertainty resolves through comprehensive agreements
3. Chinese stimulus proves more effective than anticipated
4. Energy prices moderate further, supporting consumer spending

Downside Risks:

1. Trade tensions escalate into broader economic fragmentation
2. Tech sector repricing triggers broader financial market turmoil
3. Geopolitical conflicts intensify, disrupting commodity supplies
4. Central bank policy errors cause either recession or inflation resurgence

Multiple economists note that the distribution of risks has shifted from symmetric to predominantly downside-tilted, reflecting elevated geopolitical and policy uncertainties. The range of possible outcomes is wider than normal, making forecasting particularly challenging.

Implications for Businesses and Policymakers

The divergent expert views underscore the complexity facing decision-makers in 2026. For businesses, the message is clear: maintain strategic flexibility, scenario plan across multiple outcomes, and avoid over-committing to single forecasts.

Policymakers confront difficult trade-offs between supporting growth, containing inflation, and maintaining fiscal sustainability. The economists' consensus suggests that countries pursuing predictable, transparent policies while investing in productivity-enhancing structural reforms will be best positioned for sustainable growth.

The global economy enters 2026 having demonstrated greater resilience than many expected during the turbulent 2025. However, that resilience will be tested by the combination of new underlying trends—AI adoption, trade restrictions, demographic shifts—and traditional cyclical pressures. Success will depend on how well economies adapt to a world that represents neither a return to pre-pandemic normalcy nor a complete break from past patterns.

KEY TAKEAWAYS

Global Growth Consensus:

World GDP projected at 2.7-3.2% in 2026

Moderate pace below historical 3.7% average

Regional divergences widening significantly

Country-Specific Forecasts:

USA: 1.8% (Morgan Stanley) - Strong consumption, AI investment

China: 4.8% (Goldman Sachs) - Export-driven, manufacturing focus

Eurozone: 1.1% (Morgan Stanley) - German support vs French/Italian consolidation

UK: Modest growth - Rate cuts to 2.75%, below-target inflation

India: 6.5-6.8% (DBS) - IT sector recovery, domestic demand

Japan: 1.0% (Morgan Stanley) - BOJ rate hikes, gradual normalization

Singapore: 2.5-3.0% (DBS) - Trade hub resilience

Brazil: 2.0-2.3% (Itaú) - Commodity exports, fiscal constraints

Australia: 2.3-2.5% (BIS Oxford) - Resource demand from Asia

Middle East: 3.9% (Emirates NBD) - Oil recovery, diversification

Cross-Cutting Themes:

1. AI Uncertainty: Potential productivity boom vs investment bubble concerns
2. Trade Fragmentation: Protectionism as structural shift, not temporary phase
3. Monetary Convergence: Most central banks moving toward neutral rates
4. Fiscal Dominance: Government spending policies matter more than interest rates
5. US Exceptionalism: America outperforming peers continues

Inflation Outlook:

Global disinflation trend continuing

USA: Core PCE rising early 2026 from tariffs, then moderating

Eurozone: Below 2% target (1.7% end-2026)

China: Core positive but GDP deflator near zero

Japan: Edging below 2% late 2026

Monetary Policy Expectations:

Fed: Rate cuts through April 2026

ECB: Two cuts in 2026, reaching 1.5%

BOE: Cuts to 2.75%, then pause

BOJ: Hold at 0.75%, potential hikes in 2027

RBI: Balancing growth support with inflation concerns

Major Risks:

Downside:

Trade war escalation

Tech sector repricing

Geopolitical conflicts

Policy errors (too tight or too loose)

Debt sustainability concerns

Upside:

AI productivity breakthrough

Trade agreements resolve uncertainty

Chinese stimulus exceeds expectations

Energy price moderation

Investment Implications:

US equity outperformance likely continues

Emerging markets diverge based on trade exposure

Fixed income: Moderate returns as rates stabilize near neutral

Commodities: Mixed outlook depending on China demand

Currency: Dollar strength may moderate, euro gains credibility

Bottom Line for 2026:

The global economy will demonstrate continued resilience but face testing conditions. Growth remains positive but unexceptional. Success depends on navigating the transition between an old world order (globalization, multilateralism) and emerging realities (economic blocs, technological disruption, climate pressures). Countries and companies that maintain flexibility, invest in productivity, and avoid protectionist temptations will be best positioned. The year represents not a crisis, but a recalibration—and managing expectations accordingly will be crucial.