Global Economic Situation Forecast for 2026: Grasping the 'Certainty' of Development
The year 2025 is coming to an end soon, and the uncertainties that once troubled us at the beginning of the year have become definite facts. However, standing at the end of 2025, we are still full of confusion and doubts about the global economic trend in 2026. Yes, time is the best way to break uncertainty, but as long as there is a future, uncertainty will always exist.
The world economy in 2025, which is about to pass, still presents a pattern of "weak recovery+strong uncertainty". The World Economic Outlook released by the IMF in October 2025 predicts that global economic growth will slightly slow down from 3.3% in 2024 to 3.2% in 2025, and further decline to 3.1% in 2026, with developed economies growing at around 1.5% and emerging economies slightly above 4%. The latest OECD Economic Outlook also makes a similar judgment: it predicts that global economic growth will slow down from 3.3% last year to 2.9% in 2025 and 2026; The World Bank emphasizes that the global economy is expected to stabilize in the next two years and grow by 2.7% in 2025 and 2026.
Based on the predictions of the aforementioned institutions and mainstream research reports, the global economy will not fall into recession by 2025, but it is still far from returning to the high growth track before the pandemic. Instead, it will struggle to move forward under the multiple disturbances of geopolitical conflicts and the aftermath of high interest rates.
In the upcoming year of 2026, the growth differentiation of major economies around the world, inflation anomalies, new trends in trade protectionism, and the evolution of technology cycles represented by AI will become core concerns. These trends will have a profound impact on China, which is highly integrated into the global economy.
1、 Analysis of the Global Economic Situation in 2026
Entering 2026, the global economy is expected to exhibit characteristics of "synchronous slowdown and stock game". Overall, the following three points will be presented: (1) a slight slowdown in growth rate but not a "hard landing": the growth center for 2026 given by institutions such as the IMF and OECD is around 3%, which belongs to a "slow but still acceptable" state; (2) Developed economies and emerging economies continue to move at the wrong pace: the former is constrained by high interest rates, fiscal contraction, and population aging, with a growth rate of around 1.5%; The latter, especially some Asian economies, remain the main contributors to global growth; (3) The sensitivity of the global economy to policies and shocks has increased: adjustments in trade policies, escalation of geopolitical conflicts, climate disasters, etc., may cause actual growth rates to deviate from the baseline scenario by 0.2-0.5 percentage points.
In this context, the following four core topics will dominate the trend of the global economy in 2026.
（1） Deep differentiation of regional economic growth potential
Firstly, the United States will achieve a 'moderate rebalancing' supported by technology investments represented by AI. From 2025 to 2026, relying on a strong resident balance sheet and sustained AI related capital expenditures, the United States will maintain a growth rate of around 2%, lower than the high point in 2024, but not sliding into recession. The expected increase in productivity and capital expenditure brought by AI is the biggest differentiation advantage between the United States and other developed economies.
Secondly, the UK and EU countries will still be plagued by long-term low growth rates, caught in the tug of slow recovery and fiscal constraints. Both the OECD and IMF predict that the growth rate of the eurozone and the UK in 2026 will be between 1-1.5%, slightly improving from the stagnant state in 2023-2024, but limited by high debt, energy transition costs, and structural unemployment. With the re tightening of fiscal rules under the Stability and Growth Pact, core countries such as the eurozone's Nederfeld are facing enormous pressure to reduce deficits, and fiscal austerity will become the main factor dragging down growth. Although the UK economy has improved, the structural scars after Brexit still limit the repair of its productivity.
Thirdly, Japan's "smooth transition" after getting rid of extremely low interest rates. Japan is currently the only developed economy in a cycle of interest rate hikes. Against the backdrop of a return to positive inflation and a certain increase in wages, Japan's monetary policy is gradually normalizing, with an expected moderate growth of around 1% in 2026, more like a "low-speed normalization" rather than a recession. After the right-wing government of Gaoshi Zaomiao came to power, it is necessary to closely monitor the negative impact of political friction on the economy.
Fourthly, India and ASEAN will continue to lead global growth. The IMF sees emerging Asia as a key source of global growth in 2025-2026, with India and some ASEAN countries expected to maintain growth rates of over 6%, benefiting from demographic dividends, manufacturing relocation, and digital economy expansion. Some of China's foreign trade and industrial chains are also being reconfigured towards these economies, which has won favorable conditions for their future growth.
Finally, Latin America and some other emerging economies will exhibit a mutually reinforcing state of high debt and low growth. The World Bank's International Debt Report points out that the debt pressure of emerging and developing countries will significantly increase from 2022 to 2024, with interest expenses reaching a new high in decades. Around 2026, they will still be in a difficult situation of "high cost+low growth rate". Some Latin American countries are susceptible to fluctuations in commodities and reversals in capital flows, resulting in fragile growth momentum.
Overall, 2026 is not a "cyclical recession year" globally, but structural slowdown and regional differentiation will further intensify.
（2） Global inflation differentiation and price pattern reconstruction
After experiencing high inflation in 2021-2023, global inflation will generally decline in 2024-2026. The World Bank predicts that commodity prices are expected to decline by 12% in 2025 and another 5% in 2026. Mainly due to the decline in energy prices, it has driven down headline inflation in various countries.
But this' pullback 'has significant regional differences: the United States is constrained by widespread tariffs and labor supply shortages (immigration restrictions), facing the risk of' secondary inflation ', and core PCE may stubbornly remain above 2.5%; The inflation problem in Europe can be said to have been basically solved, and it is on the brink of controlled inflation but demand deflation; Japan is currently the only developed economy in a state of inflation alert; Due to exchange rate fluctuations and the impact of food and energy prices, some emerging economies have not completely subsided, and the downward speed of core inflation has slowed down. Real interest rates still need to be maintained at a high level to consolidate price stability.
（3） Monetary policy will enter the end of the 'high interest rate era'
As inflation falls, most developed economies will have the conditions to shift from tightening to "moderate easing" in 2025-2026. Both the IMF and OECD previously predicted that the Federal Reserve would only cut interest rates twice by the end of 2026, and then maintain the federal funds rate between 3.25% and 3.5% throughout 2027. Although there is some disagreement among the Federal Reserve Policy Committee on whether to continue cutting interest rates, they still implemented the established third rate cut of the year as scheduled on December 10th. The benchmark interest rate has already reached the range of 3.5% -3.75%. In this situation, according to the dot matrix chart released by the Federal Reserve, this interest rate level will be maintained until September next year, and then a 25 basis point rate cut will be implemented in the second half of 2026.
In contrast, the Bank of Japan may go against the trend and continue its slow rate hike process, which will trigger a further reversal of the yen's carry trade and exacerbate global capital market volatility. Some emerging economies, especially Latin American countries, have already entered the interest rate cutting cycle in 2024-2025 due to early interest rate hikes. They are expected to further relax their currencies in 2026 to alleviate debt burdens and growth pressures.
For the world as a whole, the 'high interest rate era' will show a marginal ebb around 2026, but real interest rates may remain slightly higher than pre pandemic levels, and financial conditions will not return to extreme easing, which means that the test for high debt economies such as Africa and Latin America is still ongoing.
（4） Capital Market and AI Driven US Stock Market Prospects
2026 is the decisive year for generative AI to shift from the "capital expenditure period" to the "application verification period". The focus of Wall Street will shift from hardware vendors like Nvidia who sell shovels to software and servers that can effectively reduce costs and increase efficiency through the use of AI. If AI fails to demonstrate its ability to improve total factor productivity (TFP) in large-scale commercial applications by 2026, US tech giants may face a severe valuation correction, which could trigger a global repricing of risk assets.
Morgan Stanley pointed out in its 2026 economic outlook that although global growth is moderate, the resilience of US consumption and AI related capital expenditures are expected to support profit growth, so there is still room for upward momentum in the US stock market under the benchmark scenario.
Based on the above analysis, the main risks facing the global economy in 2026 can be summarized as follows: (1) the "double high superposition" of interest rates and debt: although interest rates have begun to fall, under the high debt stock, emerging economies still face enormous debt pressure, and the probability of triggering local debt crises cannot be ignored; (2) Trade conflicts and geopolitical escalation: Tariff escalation, expanded sanctions, or worsening regional conflicts can all amplify global volatility through trade, energy, and financial channels; (3) The structural slowdown of China and other major economies: As the world's second-largest economy, if China's progress in real estate, local debt, and consumption recovery falls short of expectations, it will have spillover effects on global demand and confidence; (4) The impact of climate and energy transition: Extreme weather, fluctuations in commodity prices, and imbalanced implementation of green transition can all become black swans or gray rhinos for the economy and market; (5) Technological and regulatory uncertainty: The regulatory framework for technologies such as AI and big data has not yet taken shape. Once a systemic security incident or significant regulatory tightening occurs, it will have an impact on market sentiment and investment direction.
2、 The Impact of Global Economic Trends on China in 2026
（1） Overall assessment of China's economic situation in 2025
The Chinese economy will still demonstrate considerable resilience in 2025, and achieving the 5% economic growth target set at the beginning of the year is almost certain.
In terms of external demand, the export of the "new three types" (electric vehicles, lithium batteries, photovoltaics) continues to maintain global dominance; High tech manufacturing investment maintains double-digit growth, and the cultivation of new quality productivity is showing initial results. However, due to the L-shaped bottom characteristics of the real estate market adjustment, the drag on investment and local finance still exists. Although residents' willingness to consume has improved, their precautionary savings tendency is still relatively high due to asset price effects (stock market, real estate market fluctuations). 2025 is a painful period for the transformation of China's economic momentum, and the contradiction between the decline of old momentum and the continuation of new momentum remains prominent.
China is expected to continue setting a growth target of nearly 5% in 2026 to complement the start of the 15th Five Year Plan and hedge against real estate adjustments, weak demand, and deflationary pressures.
（2） The potential impact path of the global economy on China in 2026
1. External demand and export structure
The external environment in 2026 will have both positive and negative factors. The positive side is mainly reflected in: (1) the moderate growth of developed economies means that there will not be a significant contraction in demand for Chinese products, and the United States and Europe remain important markets in high-end manufacturing, smart terminals, and service trade; (2) With the release of the RCEP dividend and the deepening of the "Global South" cooperation, as well as the high growth rate of emerging Asia, especially ASEAN and India, it will further enhance the complementarity between China and these economies in the field of intermediate goods, capital goods and consumer goods. In 2026, the trade volume between China and the countries jointly building the "the Belt and Road" is expected to exceed 50% historically.
2. Price transmission and commodity channels
The overall decline in global commodity prices from 2025 to 2026 is beneficial for China to reduce imported inflation, alleviate cost pressures on enterprises, and support the recovery of manufacturing profits. But the price drop will also compress the profits of some upstream industries, forcing them to accelerate transformation and integration.
3. Interest rates, exchange rates, and capital flows
As the United States and Europe enter the channel of interest rate cuts, the pressure of interest rate differentials between China and the United States is expected to ease, and the pressure of RMB depreciation is relatively reduced, which is conducive to maintaining the stability of the foreign exchange market and opening up space for the central bank to implement a more self centered loose monetary policy. However, considering the strong attractiveness of US assets, the Chinese capital market needs to continuously improve in terms of institutional environment, return rate, and predictability in order to attract foreign investment.
4. Debt risk spillover and external asset security
The World Bank and a number of institutions have reminded that the debt risk of developing countries is still rising. Once a new tide of debt restructuring occurs, it will affect the security of China's creditor's rights and the pace of project promotion in countries along the "the Belt and Road".
5. The game between technology and industrial policies
In key areas such as AI, semiconductors, and green energy, developed economies are strengthening export controls and industrial subsidies, which pose external constraints on China. In 2026, the US and its allies' technology blockade against China will expand from "advanced process chips" to "mature processes" as well as AI application layers, quantum computing, and biotechnology fields. The extreme external pressure may increase the supply chain costs and research and development difficulties of Chinese related enterprises in the short term, but in the long run, it will force domestic substitution to enter the deep-water zone. 2026 will be a key milestone for China's semiconductor industry chain to achieve non beautification breakthroughs. In addition, the global demand for AI and green transformation also provides a huge market for Chinese related enterprises, but the competitive dimension will gradually shift from cost advantage to "technology+brand+safety".
6. Regional Geopolitics and Surrounding Environment
From the perspective of the Asia Pacific region, China has strengthened its economic and trade ties with neighboring countries through RCEP, the Shanghai Cooperation Organization, and multilateral development institutions, in the context of "building trust in Asia while weakening US influence" as described by The Economist. This is not only a need to buffer the pressure from the United States and Europe, but also an important way to promote the internationalization of the renminbi and the upgrading of regional value chains.
Overall, the global economic trend in 2026 is neither purely negative nor a favorable situation for China. In the comprehensive environment of roughly stable external growth rate, accelerated restructuring of trade patterns, and marginal improvement of financial conditions, China's greater challenge lies in how to make good use of this relatively "flat" external environment to complete internal structural adjustment and transformation of growth momentum.
Conclusion: Grasping the "Certainty" of China's Development in Global Uncertainty
Overall, in 2026, the world economy will continue the trend of "slow growth, intensified differentiation, and accumulated risks". The United States maintains moderate growth with AI and consumer resilience, while Europe and the United Kingdom compete with high debt in a low-speed recovery. Emerging Asia is the main growth pole, while Latin America and some developing countries are struggling to move forward under high debt pressure. Against the backdrop of falling inflation and peak interest rates, monetary policy is gradually shifting, but trade conflicts, geopolitical conflicts, and climate risks make the global outlook still "cloudy".
For China, this is both a challenge and an opportunity. The challenge lies in the combination of external demand, technological blockade, financial fluctuations, and debt risks of developing countries; The opportunities lie in the global green transformation and digital wave, the rapid development of emerging Asia, and the potential upward space of RMB assets in global allocation.
The key lies in how to leverage the top-level design of the 15th Five Year Plan to form a coordinated and consistent policy combination in areas such as finance, currency, industry, regional openness, and social policies: not only stabilizing the reasonable growth range of around 5%, but also solidly promoting economic structural transformation and high-quality development. As long as China can maintain the bottom line of avoiding systemic risks in this round of global restructuring and achieve new breakthroughs in key areas, it is still expected to continue to play the dual role of a "stabilizer" and "power source" of the world economy in 2026 and beyond.
