Global Macro 2026: Growth will be steady but subdued in 2026

Executive Summary

Global Macro 2026-27 Outlook: Mixed picture for global growth

Global growth will likely remain steady but subdued with advanced economies growing modestly and emerging markets mostly maintaining stronger momentum. On trade, the possibility of China and the US decoupling has increased with rising restrictions and uncertainty, but other global economies could strengthen their relationships. Outlooks vary widely across G-20 economies.

>> Global growth will likely remain steady but subdued with advanced economies growing modestly and emerging markets mostly maintaining stronger momentum. On trade, the possibility of China and the US decoupling has increased with rising restrictions and uncertainty, but other global economies could strengthen their relationships. Outlooks vary widely across G-20 economies. Global growth outlook is mixed. Global real GDP growth will likely hover around 2.5% in 2026 and 2027, down from 2.6% this year and 2.8% in 2024. Our outlook is broadly consistent with our August assessment, with only slight upward revisions for G-20 advanced and emerging economies. Overall, advanced economies will likely grow about 1.5% annually for the next two years. We expect emerging markets to expand by around 4.0% in the period, reflecting expectations of stronger 2026 growth for the US and China and some downward revisions.

>> A resilient US economy belies a labor market characterized by stagnant hiring and slow job growth. The US economy has remained resilient but it is slowing with soft hiring and income growth consistent with the late phase of the business cycle. The labor market is stable but strong consumer spending and investment in artificial intelligence (AI) have supported robust GDP growth, prompting upward revisions to our 2025 and 2026 forecasts.

>> China exports and government support still offset a soft domestic economy. China’s economy is on track to grow 5% in 2025, supported by government stimulus and strong exports, though real GDP growth is likely to gradually slow to 4.2% by 2027. Domestic fundamentals remain soft, with uneven consumption, weak corporate lending and shrinking fixed asset investment.

>> Central banks are in different stages of policy normalization. Monetary policies are diverging globally, with the US Federal Reserve easing policy because of labor market concerns, while other central banks are taking more cautious approaches. Emerging market monetary policies also vary, with central banks in China and Indonesia easing and the Reserve Bank of India (RBI) holding steady.

>> Risks abound, including geopolitical tensions, potential trade and market disruptions. A correction in tech company valuations could trigger a significant US equity market sell-off. Geopolitical tensions, trade disruptions and political instability are amplifying uncertainty. Diverging monetary policies and fragile bond markets, prone to bouts of intense volatility, may exacerbate financial turbulence, while rapid technological advances offer productivity gains and transformative impacts across industries, even as they render certain sectors and occupations obsolete