The global economy has weathered trade shocks relatively well throughout 2025, supported by easing financial conditions, moderating inflation, trade negotiations and the agility of the private sector in re-organising the supply chain and rerouting trade flows. Looking ahead to 2026, global growth prospects remain subdued as market volatility persists, trade barriers are high and downside risks to global growth still dominate.
Delivery
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Key Findings
Resilience continues but growth prospects remain weak through to 2026
The global economy continues to adapt to the changing trade landscape and demonstrates resilience in 2025, on the back of lower interest rates, easing inflation, a speedy reorganisation of global supply chains and the negotiation of trade deals between the US and its key trading partners. Nevertheless, higher tariff levels and ongoing policy uncertainty cloud the outlook. In Euromonitor’s Q4 baseline forecasts, the global real GDP growth rate is expected to slow to 3.1% in 2025 and 3.0% in 2026. Risks to global growth have eased from a peak level in early 2025, but remain titled to the downside amid geopolitical rivalries, climate disruptions and high debt levels.
Growth to slow down in both advanced and emerging and developing markets
Looking into 2026, growth is expected to remain muted in advanced markets; while developing and emerging markets would see slightly slower growth as increased trade barriers hit exports. In the US, economic momentum continues to slow amid cooling demand, higher tariffs and uncertain policy environment. Growth is expected to accelerate gradually in Europe as interest rates decline, but US tariffs continue to be a headwind. China’s economy demonstrates resilience so far, but growth prospects could weaken in 2026 as consumption subsidies wane and demand weakens.
Global inflation to ease to 3.5% in 2026, but upside risks remain
The impact of tariffs and supply chain realignment on inflation has been limited so far, thanks to front-loaded shipments and trade rerouting. Global consumer price inflation is forecast to decline further to 3.5% in 2026, down from an estimated rate of 4.0% in 2025, supported by lower energy prices while economic activity weakens. Easing tariff uncertainty should help stabilise price pressures in 2026. However, risks of renewed global inflation persist, particularly if commodity prices spike due to climate shocks or escalating geopolitical tensions.
Global growth showed resilience, with fragile outlook due to market volatility
Key findings
Key country insights
Global growth outlook: Resilience holds with agile private sector and less uncertainty
Global inflation outlook: Steady moderation with some variation across countries
Risks to global growth have eased, but downside risks still dominate
Real GDP annual growth forecasts and revisions from last quarter: AE
Real GDP annual growth forecasts and revisions from last quarter: EMDE
Inflation forecasts
Central bank interest rate quarterly forecasts
Global scenario map: Trade-related uncertainty dominates the risk landscape
Global Risk Index scores and rankings
Trump Total Agenda scenario: The risk of an escalated trade war remains
Trump Tariff Easing scenario: Tariff rollback and policy stability can revive confidence
US: Growth slows down amid policy uncertainties and cooling demand
US: Inflation edging up in multiple sectors
US: Trade and internal policy uncertainty undermines confidence
US: Trade war and political instability pose key risks to growth
China: Growth to slow down in 2026 despite an extended trade truce with the US
China: Business and consumer sentiment stay muted on slowing economy
China: Fragile outlook amid ongoing internal and external risks
India: Growth remains robust with solid private consumption and easing inflation
India: Commodity shocks and further US tariff hikes are key downside risks
Japan: Growth to slow down in 2026 on weak external demand and persisting inflation
Japan: Export-led growth prone to shocks from the world’s two largest economies
Indonesia: Solid growth sustains on stimulus, tech investment and monetary easing
Eurozone: O utlook stable with resilient consumption but constrained by tariffs
Eurozone: Inflation expected to remain stable, with balanced up- and downside risks
Eurozone: Trade uncertainty decreases but sectorial risks remain
UK: Growth expected to improve slightly in 2026 on lower interest rates
UK: US-UK Economic Prosperity Deal secures 10% US tariff but exposes sector risks
Russia: Sharp slowdown amid lower energy prices and sanctions
Brazil: Tight monetary policy and trade tensions curb economic growth
Brazil: Trade tensions and domestic risks challenge growth outlook
Mexico: Trade dependence on the US results in economic vulnerability
Baseline and alternative scenarios: Q4 2025 (1)
Alternative scenarios: Q4 2025 (2)
Alternative scenarios: Q4 2025 (3)
Global Economic Forecasts reports: Helping businesses prepare for economic shifts
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