"The global economy proved to be more resilient in 2025 than had been feared, despite severe headwinds that ranged from Donald Trump's trade war to geopolitical tensions and the conflicts in Ukraine and the Middle East. Entering the new year, the hope is that the worst of the recent inflation shock has passed, as the world's most powerful central banks lower interest rates. However, the pre-Covid age of rock-bottom borrowing costs is a distant memory, global growth is slowing and conditions remain fragile."
"Could companies ploughing vast sums into datacentres, IT and automation kickstart productivity growth? Or could enthusiasm wane amid investor fears of a bubble in the US stock market fuelled by stratospheric valuations for AI companies? Polling by Deutsche Bank of its institutional clients revealed that a tech bubble bursting topped the ranking of the 15 largest risks for the year ahead, with 57% of respondents placing it among their three biggest risks."
"Despite a potential AI tailwind, global GDP growth is forecast to moderate in 2026 amid the hit to international trade from Trump's tariff policies. Consumer demand squeezed by years of elevated inflation and borrowing costs remains under pressure. Growth in China is expected to slow as Beijing faces rising challenges in stoking activity. The US is forecast to lead the G7 growth league table, followed by Canada and Britain."
The global economy showed resilience in 2025 despite headwinds from Donald Trump's trade war, geopolitical tensions, and conflicts in Ukraine and the Middle East. Central banks are lowering interest rates as inflation eases, but pre-Covid rock-bottom borrowing costs are gone. Global growth is forecast to moderate in 2026 and conditions remain fragile. Large corporate investment in datacentres, IT and automation could boost productivity, yet investor fears of a US tech bubble are prominent. Deutsche Bank polling found 57% of institutional clients ranked a tech bubble among their top three risks. Consumer demand is squeezed by elevated inflation and borrowing costs; China’s growth is expected to slow while the US leads G7 growth, followed by Canada and Britain.
Read at www.theguardian.com
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