For 2026, massive capital expenditure on AI infrastructure like data centers and semiconductors will fuel economic demand and inflation. The widely expected productivity gains that lower inflation are a supply-side effect that will take several years to materialize.
Significant deviations from baseline global economic forecasts in 2026 are expected to originate from the US. While interconnected, Europe and China are seen as unlikely to produce major upside or downside surprises, making US performance the key variable for global markets.
The 2026 US economic forecast is not a simple slowdown but a tale of two halves. A weaker first half is expected due to lingering effects of tariffs and policy. A recovery is projected for the second half as spending remains resilient and the economy adjusts.
A significant split in monetary policy is expected in 2026. The US Federal Reserve and European Central Bank are predicted to cut rates in response to slowing growth and easing inflation. In stark contrast, the Bank of Japan is on a hiking cycle, aiming to reflate its economy.