2026 Outlooks: Four forces will shape global credit in the year ahead

Executive Summary

Global 2026 Outlook: Politics, innovation and the climate will drive credit conditions

The year ahead will be shaped less by the business cycle and more by structural change and changing political dynamics. In this report, we trace how polarization, non-bank finance, technology and climate are re-wiring credit risk and where dispersion is likely to widen.

» Political polarization is disrupting policy norms and reshaping global governance. Rising voter dissatisfaction with mainstream political parties and globalization's effects is fostering more of an inward-looking policy stance across major economies, making international relations increasingly transactional and fragmented. This policy reorientation risks damaging institutional structures, reducing predictability and increasing credit risks. Combined with weak fiscal positions and limited monetary flexibility, it is also likely to weigh on growth, factors markets may still be underpricing.

» The shifting financial landscape is increasing access to capital but at a cost. Private credit has grown from a niche market into a major competitor to and collaborator with traditional banking, with further expansion likely. Its flexibility offers vital financing for some sectors. But there are concerns about future performance and risks around interlinkages, leverage, and transparency. Meanwhile, digital finance is reshaping liquidity, with innovations like stablecoins and tokenized assets expanding access and driving efficiencies but introducing new risks. Growth in local funding markets also offers to expand access to capital and reduce currency and maturity mismatches, but inconsistent regulation and weak governance remain major hurdles.

» AI’s broader opportunities depend on continued breakthroughs. Investment in advanced chips and data centers remains strong, fuelled by optimism about AI’s transformative potential. The broader economic and credit effects, however, hinge on improvements in reliability and capabilities that lower adoption barriers and expand viable use cases. If progress stalls after 2025, benefits will concentrate in highly digital, dataintensive sectors; continued breakthroughs would spread impacts across a wider range of industries. How organizations manage related cyber, environmental, and social risks, alongside evolving regulation and competitive dynamics, will be critical though.

» Rising costs from extreme weather events are shifting credit risk across the economy. More frequent and severe events drove economic losses to about $318 billion last year. In advanced economies, insurers are responding by raising premiums and limiting coverage, but this risks depressing property values, eroding tax revenues, and increasing reliance on government support. Governments are boosting adaptation spending, but it will need to compete with other budget priorities and in emerging markets remains far below the $387 billion estimated annual need. Market-based instruments like catastrophe bonds and climate-linked debt clauses offer partial solution