Three Scenarios Define The 2026 Outlook Pressreader

Bonisiwe Shabane

-Dec 27, 2025, 8:30 PM

three scenarios define the 2026 outlook pressreader

Risk Warning: this article represents only the author’s views and is for reference only. It does not constitute investment advice or financial guidance, nor does it represent the stance of the Markets.com platform.When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that... This information is provided for informative purposes only and should not be construed to be investment advice. Trading cryptocurrency CFDs and spread bets is restricted for all UK retail clients. Proposed expansion of ESMA's powers raises concerns about the potential impact on the EU's crypto and fintech sectors. Centralized licensing and slower regulatory processes are key worries.

Bitcoin's 'Santa' rally may be ignited by the Federal Reserve's upcoming interest rate decision. This article analyzes the macroeconomic factors potentially influencing Bitcoin's performance into 2026. Western Union expands into digital assets with a new stable card and plans to issue its own stablecoin, focusing on emerging markets. For privacy and data protection related complaints please contact us at privacy@markets.com. Please read our PRIVACY POLICY STATEMENT for more information on handling of personal data. Global economic conditions proved more resilient in 2025 than many feared, according to Oxford Economics.

Despite uncertainty following President Donald Trump’s presidential victory, global GDP growth remained steady at around 2.8%. Read also: Global Trade: The Pathway to Economic Prosperity As we look ahead to 2026, the global economic outlook is shaped by several unique forces that make the timing and magnitude of their impacts difficult to read. The analysis unpacks the three global themes that will define 2026 and outlines what they mean for the economic outlook. Much of the uncertainty in 2025 centred on the scale of US tariff increases. Today, the bigger question is no longer how high US tariffs will rise, but what the knock-on effects of sustained high US tariffs will be.

For the US, we do not expect tariffs to significantly dampen its domestic activity. Strong household incomes and ongoing fiscal loosening should allow US exceptionalism to continue in 2026. However, we expect tariffs to have a more sustained dampening impact on US imports than the consensus, limiting the spillovers of US domestic strength to the rest of the world. Despite facing very high US tariffs, overall Chinese exports have continued to grow at a reasonably healthy pace. We expect this to continue into 2026 as authorities continue to promote manufacturing-led growth. This is likely to push down Chinese export prices further as firms seek to export additional production.

The latest deflationary episodes may have more adverse spillovers for advanced economies than previous periods of falling Chinese prices. The shift in China’s export basket since the last disinflationary episode in the mid-2010s towards higher value-added products has put Chinese firms in more direct competition with producers in North-East Asia and Europe. Falling Chinese prices will thus only add to competitive pressures for manufacturers in both regions. At Morgan Stanley, we lead with exceptional ideas. Across all our businesses, we offer keen insight on today's most critical issues. Learn from our industry leaders about how to manage your wealth and help meet your personal financial goals.

At Morgan Stanley, we lead with exceptional ideas. Across all our businesses, we offer keen insight on today's most critical issues. From volatility and geopolitics to economic trends and investment outlooks, stay informed on the key developments shaping today's markets. At Morgan Stanley, we lead with exceptional ideas. Across all our businesses, we offer keen insight on today's most critical issues. For Americans who felt 2025 was a ceaseless storm of norm-challenging change, there may be balm in the celebrations of the republic’s 250th birthday on July 4.

But more soberly, 2026 will also be marked by Supreme Court decisions that could upend the very foundation of our democracy. Will work insecurity grow as AI matures from loud infancy into a tricky “technolescence”? What will memes have to teach us? And what about that new musical genre bubbling out of Asia? Bruin experts cast a light on the path ahead. UCLA Anderson School of Management macroeconomist Clement Bohr predicts the economy will remain largely “frozen” out of the gate but will see improvements as the year progresses on the back of fiscal and monetary...

His overall general outlook is “rosy, with stimulations from the Big Beautiful Bill working through, if — and it’s a big if — administration polices remain stable and predictable.” Bohr, an adjunct professor of global economics and management, is monitoring talk of an artificial intelligence bubble — just seven AI-fueled companies account for a third of all Wall Street wealth. But Bohr believes the tech giants are so flush with cash that even if some spending is kept off balance sheets through “special vehicles” created by often-veiled private credit concerns, the companies “can ride... “Right now, these giants generate about $60 billion a year in AI-related revenue,” Bohr says. “But by 2030, to keep up with rising chip power and costs, that will have to be between half a trillion and a trillion dollars.” A leading researcher behind the internationally cited UCLA Anderson Forecast, Bohr is most concerned about the forthcoming Supreme Court decision as to whether a president can replace board members of the long-independent Federal Reserve...

“Economics is a social science, not a hard science, but one certainty that unites all economists is that subjecting federal money policy to political rather than business cycles, typically lowering interest rates for election... (Turkey’s hastily lowered interest rates resulted in 87% inflation; its interest rates are now around 38%.) “We have not hit the Fed’s inflation target for five years, and even a slight signal about loss... 2026 will see AI boost research across many areas, especially biomedicine. But there will be a price to pay and a need to consider the toxic side effects as it grows from loud infant into hungry teen, says Ramesh Srinivasan, professor of information studies at... It’s not just land, water, electricity and overexcited marketing that are key factors, but also AI’s social justice and social-psychological effects. Can we keep up with the rapid changes, with governments willing or capable of shielding us from the dark side of this new wave of technology?

Says Srinivasan: “We may start to find out in 2026.” The transition from one world order to another is in full swing, but it is still unclear how that new world order will look. The advent of AI, China’s rise, and the US’s relative decline offer challenges but also opportunities. The trade war weapon du jour has shifted from tariffs to chokepoints, creating new challenges for governments and manufacturers. Fiscal troubles in France and the UK are likely to remain a worry. Global growth has been remarkably resilient given the headwinds.

We expect that resilience to continue in 2026, albeit with considerable risks. Head Macro Research / senior economist eurozone Senior Economist Netherlands and eurozone We weren’t joking when we said 2025 would be the Year of the Tariff. But 2025 was about much more than just tariffs. Three major shifts began in earnest, and 2026 could be the year that these accelerate.

First, the AI boom is beginning to have transformative effects – not so much in the real economy just yet, but certainly in financial markets. While leading institutions have warned of the risk of a potential market bust, we economists will be watching closely for further signs of AI’s impact on labour markets and on productivity. The second major shift we observe is China’s coming-of-age on the global geo-economic stage. While our China economist had rightly flagged that Beijing was much better prepared for Trade War 2.0 than it was in Trump’s first presidency, the degree to which it successfully wielded the leverage of... The third big shift, and perhaps the corollary of China’s ascent, is the decline in the US’s relative power and influence. While still a clear leader in the AI race, the erosion of US institutions threatens its leadership of the global financial system.

For now, the US dollar and Treasuries remain the only game in town as globally safe liquid assets, given the lack of genuine alternatives. With Europe more awake to the challenges of an inward-looking US, but also the opportunities in a world where dollar dominance is no longer a given, next year could – in an admittedly optimistic... Against the backdrop of these transformative shifts, our view on the economy next year is a relatively benign one. The US continues to coast along, though solid overall growth figures will mask an increasing divergence between those benefitting from the AI boom, and a Main Street that is feeling the inflationary pinch from... Europe will still see a slow-burning drag from US tariffs next year, but this will increasingly be offset by stronger domestic demand – helped by the ECB’s rate cuts – as well as Germany’s... China is expected to take modest further rebalancing steps, though nothing that is likely to be game-changing as a major global demand impulse.

Finally, politics offers as much promise as it does peril. Populism will face key tests with the US midterms in November, and Hungary’s general election (crucial for EU policymaking) in April, while France faces an ongoing risk of a snap election, should the government... This report analyzes ten plausible economic scenarios for 2026, grounded in current trends, historical precedents, and recent policy developments. Each scenario is explored with supporting facts and an evaluation of potential outcomes. Historical Context & Trends: The European Union's Green Deal and the U.S. Inflation Reduction Act have set ambitious net-zero targets, with massive subsidies for renewable energy, batteries, and hydrogen123.

The EU aims for climate neutrality by 2050, while the U.S. has introduced the largest climate subsidy package in its history. Historical Context & Trends: Decades of globalization led to complex, interdependent supply chains. Recent geopolitical tensions and the COVID-19 pandemic exposed vulnerabilities, prompting a shift toward "de-risking," reshoring, and friend-shoring45. Historical Context & Trends: Emerging markets with high dollar-denominated debt are vulnerable to external shocks. Past crises (e.g., Argentina, Turkey) were triggered by rising U.S.

interest rates and commodity volatility. Historical Context & Trends: Investments in AI are accelerating, with governments and the private sector targeting healthcare, finance, and logistics.

Three Scenarios Define The 2026 Outlook Pressreader

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