Global Economy Set to Grow 2.8% in 2026

Global economic growth is forecasted to reach 2.8% by 2026, driven by a variety of factors impacting major economies. The initial half of 2026 is expected to see robust GDP growth, spurred in part by the recovery from the US government shutdown.

Global Economic Growth Insights

According to Goldman Sachs Research, the anticipated growth comes alongside a troubling trend in labor markets worldwide. Job creation within developed economies has notably lagged behind 2019 levels, reflecting a significant downturn in immigration that has affected labor force expansion.

Unemployment Trends in Developed Economies

Especially evident in the United States, job growth has possibly dipped into negative territory over the summer months. As global GDP rises, the disconnect between economic activity and job creation poses concerns for labor markets.

The Role of Artificial Intelligence

The impact of artificial intelligence (AI) on job markets and productivity remains largely confined to the tech sector. Economists predict that substantial gains in productivity from AI technologies may still be several years away.

China’s Economic Landscape in 2026

The economic outlook for China presents a complex picture. The nation continues to excel in producing high-quality goods at competitive prices. Recent trade negotiations have demonstrated that China can withstand high tariffs on exports, indicating resilience in its manufacturing sector.

Challenges Facing China’s Domestic Economy

Despite a strong manufacturing base, significant weaknesses persist in China’s domestic economy. The property market faces challenges, with property sales down 60% and new property developments plummeting by 80% from peak levels. This downturn in real estate is anticipated to contribute a 1.5 percentage point drag on GDP growth next year.

Current Account Surplus Projections

The juxtaposition of a thriving manufacturing sector and subdued domestic demand is inflating China’s current account surplus. Forecasts suggest this surplus could approach 1% of global GDP over the next three to five years, marking a historic high for any country.

Implications for Global Competition

This surplus is expected to exert downward pressure on growth in economies that compete vigorously with China, such as those in the euro area, particularly Germany. As global economic dynamics evolve, understanding these trends will be essential for navigating the future economic landscape.