International and Monetary Economics Network

• Global GDP growth remains solid. Global trade has proven more resilient than expected. However, higher tariffs and rising protectionism will weigh on global growth and trade in 2026 and 2027.
• We expect global economic output to increase by 2.9 percent in 2026. For 2027, we currently anticipate a slight acceleration to 3.1 percent.
• The US economy benefits from the AI boom, but the rest of the economy is less strong. However, US households benefit from the easing of fiscal and monetary policies.
• The Chinese economy depends on exports, but domestic demand continues to struggle.
• The Euro area remains on a solid growth path despite structural challenges and high debt in some countries. The German fiscal stimulus will gradually lift growth in Germany and also spill over to other European countries.
• Monetary and fiscal policy: Mostly expansionary fiscal policy and monetary policy is becoming increasingly divergent.
• The Swiss economy remains resilient with modest growth rates. The pharmaceutical sector will be less of a growth driver than in the past.
• Many (mostly downside) risks, among them: Conflicts and geopolitical tensions have the potential to escalate, supply chains for critical raw materials are fragile, the AI boom could end abruptly, and potential public debt crises.

The global economy held up solidly over the past year despite the burden of trade conflicts and geopolitical turbulence, losing only slightly in momentum. In some countries – particularly the United States – the AI boom provided strong impetus for investment.

Monetary policy is expected to be eased further in the United States, while in the eurozone central bank interest rates are likely to remain at their current level for the time being. At the same time, fiscal policy is providing expansionary stimulus, not least because defense spending is being significantly increased in many countries given the tense and conflict-ridden geopolitical situation. The dampening effects of U.S. tariff policy are likely to become more clearly visible in the coming year.

Against this backdrop, we expect a further slight slowdown in global economic expansion in the coming months. In the United States, there is likely to be a temporary growth dip, and in the eurozone the economy will continue to expand solidly but without great momentum. In the other advanced economies – particularly Japan, South Korea, and the United Kingdom – growth remains similarly subdued.

In China, too, growth prospects have further deteriorated given the ongoing problems in the real estate market and weak domestic demand. The other emerging markets are mostly expanding solidly, led by India’s economy, which continues to grow strongly.

All in all, we expect global economic output to increase by 2.9 percent in 2026, slightly down from 3.0 percent in the current year (measured on a purchasing power parity basis). For 2027, we currently anticipate a slight acceleration to 3.1 percent.