In many major economies, growth will likely be supported by fiscal policy stimuli in 2026. More expansionary monetary policies by many central banks should also have a positive effect, particularly on investment demand. The differences in growth between the major economic areas persist, with robust growth in the US, but only moderate growth in Europe. Although China is expected to grow somewhat more slowly in 2026, Asia’s emerging markets will continue to be the fastest-growing region in the world.

The global decline in inflation rates is likely to continue in 2026, albeit at a slower pace. The main drivers of inflation in industrialised countries continue to be higher rates of price increases in the service sector, which are counteracted by falling energy prices. Trade conflicts and the high import tariffs imposed by the US have not had a significant impact on inflation worldwide, but have produced noticeable effects in the US. 

In the US, real GDP growth is likely to be 2.4% in the current year – not as high as in 2023/24, but slightly higher than in 2025 and thus in line with the average for the past 10 years. Private consumption will grow somewhat more slowly in 2026 and is becoming increasingly divided: while wealthier households significantly increase their spending, lower-income households suffer from persistently high prices, which are exacerbated by import tariffs. Strong investment in technology, and in artificial intelligence in particular, will continue to support growth in the US economy this year.

The inflation rate remains above 2.5% and is not expected to fall significantly in 2026. The main drivers are still high inflation in the services sector and the continued visible influence of import duties on prices for consumer goods. Accordingly, the US Federal Reserve’s inflation target likely won’t be reached this year, either. However, as the US Fed must also keep an eye on labour market developments and there are signs of a slowdown, financial markets do expect further cuts in the key interest rate in 2026. 

At 1.1%, economic growth in the eurozone is expected to be slightly lower than in the previous year (1.4%) and remain below the ten-year average of 1.5% in 2026. The reasons for this subdued growth are primarily structural. In addition, the challenges in the global economic environment limit growth, particularly for export-dependent countries such as Germany.

The differences in growth are distinct: after three years of recession and stagnation, Germany, the largest economy in the eurozone, will likely rebound to a small plus of just under 1%, chiefly due to fiscal policy stimuli and the resulting investments. France and Italy will continue to grow only modestly in 2026. Among the large eurozone member states, Spain will remain the country with the highest economic growth in 2026, due in part to its being less dependent on international trade.

Inflation in the eurozone already neared the European Central Bank’s 2% target in the course of the past year – and is expected to fall slightly below the mark in 2026. Lower energy prices should continue to have a dampening effect on inflation, prices for consumer goods will not rise sharply, and price increases for services should decrease as a result of more moderate wage agreements and thus have a similar effect. After a whole series of key interest rate cuts by the ECB in the first half of 2025, financial markets do not expect any changes in key interest rates for 2026 against the backdrop of these macroeconomic conditions. 

In China, economic growth is expected to slow to around 4.5% in 2026 – below the previous year’s level (5.0%) and well below the average for the past 10 years (5.6%). A recovery is expected for the recently weak investments in the manufacturing sector for 2026 in view of the new five-year plan. Exports are also likely to continue to grow, though at a slightly slower rate than in 2025. Conversely, growth dynamics in private consumption will remain moderate.

Inflation is expected to remain very low in 2026. In addition to weak consumer demand, overproduction in industry plays a key role. Producer prices in China have been falling for years, helping to keep global goods prices down, to the benefit of consumers. However, this also increases the competitive pressure on the manufacturing industry, particularly in Europe. 

Overall, the downside risks outweigh the potential scenarios of better-than-expected development. Geopolitical risks and abrupt political decisions by the US with consequences for businesses and international trade could impact the development of the global economy. In addition, strong stock market gains in the past year have increased concerns that a potential overvaluation of technology shares in the wake of the artificial intelligence boom could lead to slumps on the financial markets.

If, on the other hand, the AI boom were to accelerate in 2026 with corresponding investments and higher productivity, economic growth would be higher than expected. This scenario is particularly relevant for the US. Further, even greater than expected effects of expansionary fiscal policies or a noticeable easing of geopolitical crises would presumably lead to higher global economic growth.