Global Economic Outlook 2026 Highlights Risks and Growth Opportunities
A Deutsche Bank poll of 440 investors, economists, and analysts has identified AI and tech valuation risk as the top market concern for 2026, with 57% citing it as the leading threat. Other significant risks include loss of Federal Reserve independence and stress in private credit markets, the latter highlighted as an underappreciated risk by a Quilter poll of fund managers specializing in private equity, venture capital, and private debt.
Concerns also focus on the potential appointment by Donald Trump of a Federal Reserve chair who would advocate aggressive rate cuts, which could trigger market turmoil. Despite these risks, various forecasts remain optimistic about global equities and economic growth.
UBS projects global equities rising about 15% by the end of 2026, with the US S&P 500 forecasted around 7,700 (approximately +12.5%). Deutsche Bank targets 8,000 for the index, while Oppenheimer has a slightly higher target of 8,100. Chinese equities are noted as particularly attractive investment opportunities.
In the UK, the FTSE 100’s breach of 10,000 in 2025 sets a positive stage for 2026, with analysts expecting roughly 14% earnings growth. UK dividends are forecast to reach a new record total of about £85.6 billion in 2026. Additionally, 53% of UK retail investors remain bullish on the continuation of the bull market.
From a global growth perspective, Goldman Sachs anticipates about 2.8% growth in 2026 with the US outperforming due to tariff relief, tax cuts, and easier financial conditions. China’s economy is expected to be supported by exports, while ING maintains an optimistic view on US growth. Deutsche Bank notes that US policy could be influenced by midterm elections.
Artificial intelligence is projected to have a major impact on macroeconomic outcomes, underpinned by hyperscale AI investments. UBS highlights a potential focus on agentic AI, physical AI, and AI video, projecting approximately $4.7 trillion in global AI capital expenditure by 2030.
Regarding commodities and rates, Brent crude oil is forecasted to be around $58 per barrel by the end of 2026. The copper market is expected to experience a deficit. Two US interest rate cuts are priced in by December 2026, with at least one, possibly two, UK rate cuts anticipated.
However, some analysts warn that the consensus forecasts could be incorrect. A stronger-than-expected rebound might stoke inflation and trigger monetary tightening. Additionally, underlying imbalances could widen as policy paths narrow. Despite these caveats, the global economy is expected to avoid a downturn in 2026, even amidst higher trade barriers.
