Introduction
The global economy is bracing for a challenging year in 2026, according to the World Economic Forum’s latest Chief Economists’ Outlook. While confidence has improved slightly compared to last year, more than half of leading economists still believe global economic conditions will weaken in the coming months. This report delves into the factors contributing to this uncertainty and the potential implications for global trade, investment, and economic growth.
Key Findings
A recent survey of chief economists revealed that 53% expect the world economy to slow down, while only 19% see stronger growth ahead. Rising risks from high debt levels, inflated asset prices, and ongoing geopolitical tensions continue to weigh on the outlook. Additionally, trade disputes and shifting alliances are reshaping global investment and supply chains, with countries increasingly turning to regional and bilateral trade agreements to secure access to critical resources and technologies.
Global Trade and Investment
Global trade is adjusting to a more fragmented world, with some regions expected to benefit while others may struggle with protectionist measures and policy uncertainty. The rise of artificial intelligence (AI) stands out as both a major opportunity and a source of disruption, with economists expecting AI to boost productivity over time, but the benefits not being evenly shared.
Regional Outlook
In 2025, the global economy experienced a mix of growth and contraction, with some regions performing better than others. The US economy saw a soft month in December, with the S&P 500 finishing nearly flat, while overseas equities saw an appreciable rise. The All-Country World Equity Index (ACWI) rose 1%, with both Developed Non-US equities and Emerging Market Equities rising by 3%.
Monetary Policy and Interest Rates
Central banks are expected to play a crucial role in shaping the global economy in 2026. The Federal Reserve is set to lead global peers with an interest-rate hold, with the central bank publishing explicit forward rate guidance and its December projection indicating a prolonged hold at 1.75% until the next move being up but not until 2027. Other central banks, such as the South African Reserve Bank and the Central Bank of Colombia, are also expected to make key decisions on interest rates in the coming months.
Conclusion
In conclusion, the global economy faces significant uncertainty in 2026, with 53% of WEF chief economists forecasting weakening conditions. While there are opportunities for growth and investment, the risks of high debt levels, inflated asset prices, and geopolitical tensions cannot be ignored. As the world navigates this complex landscape, it is essential to stay informed and adapt to the changing economic environment.