Key investment themes
- Artificial intelligence’s long-term winners
- New era for China technology
- The rise of power demand
- Stockpiling pulls demand forwards for metals and minerals
- The case for emerging market debt
- Gold’s bull market is set to continue into 2026
Navigating changes, capturing opportunities
For our 2026 investment outlook, we developed our convictions around two primary forces reshaping the global economy. The ongoing reset of the global geopolitical order, coupled with the strategic race for dominance in artificial intelligence (AI), forms the cornerstone of our approach to portfolio construction for this year.
As 2026 unfolds, the global economy is entering a pivotal transition, shifting from fragmented resilience to resynchronised growth, while inflation is returning to a more normalised and moderate path.
We expect a cyclical recovery to get under way, driven by domestic demand and investment, which represents a key engine of this resynchronised expansion, even as it becomes increasingly regional and domestically oriented. Indeed, the pursuit of productivity gains across countries is poised to underpin growth over the coming years. In addition, supportive fiscal measures and growth-oriented budgetary policies, alongside broadly accommodative monetary policies, are reinforcing this positive momentum, particularly in the United States, Germany, Japan, and China.
Our outlook on equities remains constructive, with global earnings expected to accelerate and broaden along the AI value chain, notably through rising electricity demand, but also across other sectors following three years of lacklustre growth outside the US technology sector. However, in a context of elevated valuations, greater diversification and more disciplined risk management, including tactical opportunities, are required.
The more general improvement in fundamentals is also supportive of high-yield and emerging market debt, whose outperformance should continue throughout the year. Meanwhile, gold’s trajectory is likely to moderate after an exceptional rally in 2025. We nevertheless remain positive about its secular upward trend and its role as a core component of portfolio diversification.
Read our Investment Outlook 2026 for more insights.
Global growth in 2026
A synchronised recovery fuelled by innovation and investments
The global economy is expected to expand at a steady pace of 3.2% in 2026, with the United States leading the way with growth of over 2.0%, supported by resilient activity in Asia and a gradual recovery in China. The start of the year is expected to be more sluggish, with Q1 26 activity still reeling from the lingering effects of US tariffs and supply chain adjustments. Nevertheless, global activity is expected to accelerate as the year progresses. Germany is set for a rebound, while the United Kingdom and Japan are likely to see modest growth of around 1.0%. The eurozone, projected to grow at 1.1% in 2026, will benefit from German economic stimulus measures and strong performances in its peripheral countries. Domestic demand, particularly investment, will be the primary growth driver in 2026. The global race for technological leadership, especially in artificial intelligence (AI), will spur innovation and productivity gains across AI-related industries. Governments around the world, but particularly in Europe, are also expected to increase public spending on infrastructure, climate initiatives, and energy security, fostering collaboration with private sector investment as they do so.
Inflation is anticipated to return to a more moderate trajectory. The upward pressure caused by US tariffs should ease gradually, with US inflation returning to a 2.5% trend over the course of the year. Energy prices should remain contained, and services will likely moderate further, after having been elevated for several years. Meanwhile, inflation in Europe will hover around 2.0%, while prices in emerging markets will stabilise at close to the official targets.
Following the stimulus measures announced by Germany, Japan, and the United States in 2025, fiscal policy is anticipated to take on a more prominent role in supporting economic growth in 2026. Public expenditure will play a pivotal part in sustaining the investment cycle, although this approach is likely to result in persistently high deficits and a rising trajectory for public debt.
At the same time, central banks are likely to keep accommodative monetary policies in place to sustain economic activity. In 2026, interest rate reductions are expected to be more significant in developed economies. Central banks in the US and UK could follow an aggressive strategy on key rates, which will
be justified by the weakness of their respective labour markets and a sharp decline in inflation. In contrast, emerging markets are likely to adopt a more cautious and moderate approach.
Four factors underpinning steady US growth in 2026
US economic growth is projected to accelerate to 2.7% in 2026, up from 2.2% in 2025. This momentum is expected to be driven by four key factors working together to reinforce the positive trend established in 2025. Significant investment in artificial intelligence is fostering the development of a new ecosystem centred around advanced technologies. The broader take-up of these technologies is expanding investment opportunities, which in turn are anticipated to ultimately boost productivity across traditional sectors.
Consumption also remains a key driver of economic activity, particularly that generated by high-income households. To put this into context, the top 10% of earners are responsible for nearly half of all consumer spending in the US, while the top 20% account for over 60%. Additionally, wealth effects and tax refunds are expected to sustain this ‘K-shaped’ economic trend for another year, even as job creation is projected to slow considerably in 2026.
Although no new measures are expected, fiscal policy should keep the deficit at approximately 6.0% of GDP, with no significant constraints likely to be introduced during this mid-term election year. Monetary policy is also likely to be eased in two stages: initially in response to the deterioration in employment, and secondly due to the decline in inflation. The Fed will therefore reduce interest rates to just below 3.0%, pushing real interest rates to a lower level that should support further lending and growth, as well as help budget refinancing.
2026 GDP growth main countries
Moderate but stable growth in Asia amid shifting drivers
Asia’s economic outlook for 2026 suggests a phase of moderate yet stable growth, with the region expected to expand at a GDP-weighted rate of 4.1%. This marks a slight deceleration compared with 2025 as external demand stabilises and inflationary pressures prompt central banks to pause further monetary easing. Nevertheless, the effects of the easing cycle in 2025 are likely to keep interest rates relatively low. On a positive note, fiscal policy is set to play a pivotal role, with countries such as Japan and China significantly increasing investments in infrastructure and emerging technologies like artificial intelligence, which could help to partially offset a slowdown on the external front.
China, the region’s largest economy, is projected to grow by around 4.7% in 2026, down from 5.0% in 2025. This slowdown reflects cooling export momentum, alongside persistent challenges in the real estate sector, which have weighed on consumer confidence and private investment. The impact of these challenges is likely to be more pronounced in the first half of the year, with a gradual recovery anticipated in the second half. The economy remains notably unbalanced, with high-tech manufacturing driving much of its performance. However, the introduction of China’s fifteenth five-year plan (2026–2030) is expected to mark out a path towards more sustainable growth, focusing on innovation, green technology, and boosting domestic consumption. This strategic pivot is likely to help mitigate external pressures and support long-term economic stability.
Elsewhere in Asia, India and Indonesia are expected to remain key bright spots, supported by stronger domestic demand and ongoing structural reforms. Japan is likely to rely heavily on fiscal stimulus measures, with increased public investment in infrastructure, technology, and defence. Meanwhile, south- east Asia is set to benefit from supply-chain diversification and a rise in foreign direct investment.
China growth scenario for 2025–2026
The financial instruments and investment strategies portrayed in this document are for informative purposes only. They may differ from those effectively held in an investor’ portfolio. Depending on the jurisdiction and investment profile, one or some of these instruments and strategies – including, where applicable, options – may not be permitted, available or suitable. The opinions expressed herein are correct as at 19 January 2026 and are subject to change without notice. Any forecast, projection or target, where provided, is indicative only and is not guaranteed in any way.
