Expected Macroeconomic Developments¹

In 2026, the global economy faces a phase characterized by economic uncertainty and geopolitical risks. While US tariffs are creating uncertainty, significant slowdowns are expected to dampen international trade. In the US economy, strong AI investments remain a growth driver and stabilizing factor. Europe is struggling with a sluggish economy, but is showing initial signs of recovery. China’s upswing remains subdued despite economic stimulus packages. In addition, global trade flows are being slowed by tariffs, trade barriers, and geopolitical conflicts. Global inflation is falling only gradually and returning only slowly to target levels. This requires prolonged restrictive monetary policies in many countries. Trade conflicts, protectionist measures, and geopolitical risks remain the dominant factors of uncertainty.

The European economy is expected to recover only slowly from its ongoing weakness in 2026, supported by the ECB’s previously loosened monetary policy. This expansionary stance is having an impact in all countries through improved financing conditions and higher investment activity, while the slight economic stabilization is supporting demand. Nevertheless, momentum will be slowed by weaker exports as a result of US tariffs and the expiry of special EU programs. While the inflation rate is likely to remain close to the ECB’s target, core inflation is declining only slowly and remains slightly above the target. Even though a slight economic upturn is expected, overall growth will remain below potential.

The German economy is expected to see a moderate upturn in 2026. Stable ECB key interest rates and fiscal policy stimulus are providing relief for businesses and consumers, while demand is gradually improving. However, the economic recovery will be slow, as weaker exports due to US tariffs and the expiry of EU subsidies are slowing momentum. Nevertheless, the first signs of improved sentiment remain limited as structural challenges persist. A moderate growth spurt is therefore on the horizon for the coming year.

The economic development of the US in 2026 will continue to be characterized by high investment in artificial intelligence infrastructure. These impulses are creating solid momentum and supporting demand. At the same time, higher US tariffs are weighing particularly heavily on import-intensive goods and increasing import and consumer prices, while favorable financing conditions continue to support investment. Inflation remains stubbornly high as higher import costs drive up prices and overall inflation is only gradually declining. The Fed is likely to continue cutting interest rates in the face of political pressure, even as the monetary policy debate continues.

The Japanese economy is expected to continue to be driven by robust domestic demand in 2026. Wage increases, government subsidies, and the new fiscal stimulus package are supporting private consumption and corporate investment. As a result, the economy remains on a solid growth path. At the same time, the central bank is gradually normalizing its monetary policy, as inflation remains above target and conditions allow for cautious tightening. Exports to non-US markets and the tourism sector remain important drivers of growth. Fiscal programs with investments in key industries such as artificial intelligence, semiconductors, and defense are driving the modernization of the economy and stabilizing economic activity.

The outlook for emerging markets in 2026 is mixed, marked by structural challenges and global trade tensions. China’s economic growth will remain under pressure in 2026 as US tariffs weigh on export markets and increasing geopolitical tensions worsen foreign trade conditions. In addition, higher trade barriers and additional export controls, which increase the risk of supply chain disruptions, are weighing on China’s export prospects and dampening industrial development. At the same time, China is struggling with the consequences of years of misallocation of resources in the real estate sector. Although the Chinese government is focusing on infrastructure projects and measures to combat these overcapacities, these are unlikely to be sufficient to compensate for weak consumption and structural problems. Brazil’s economy is expected to see moderate growth in 2026, driven by private consumption and strong agricultural performance. Wage increases and a robust labor market with historically low unemployment are supporting demand, while high crop yields are boosting production. The central bank will continue its tightening policy in view of ongoing inflationary pressure from rising electricity and food prices. Nevertheless, geopolitical uncertainties, US tariffs, and weaker global demand could weigh on exports and dampen growth. Southeast Asian emerging markets expect robust regional trade despite ongoing US tariff burdens. China will continue to partially offset declining exports to the US with higher exports to the ASEAN region. Nevertheless, a moderate slowdown is on the horizon as global supply chains are disrupted by higher tariffs. The Indian economy remains strong thanks to private consumption and investment, supported by falling interest rates and public capital expenditure. Good harvests and low energy prices are keeping inflation stable and supporting demand. Structural reforms are boosting export performance, despite the burden of US tariffs. The Middle East expects mixed growth in 2026 amid easing geopolitical tensions. In addition, indirect effects from a weaker global economy and trade tensions could further dampen exports.

¹ Commerzbank Research – Chartbook November/December 2025.