The global economy is expected to post steady growth in 2026, even as governments and markets navigate inflation risks, geopolitical tensions and policy uncertainty, according to forecasts by major financial institutions and multilateral analysts.
Goldman Sachs Research has projected that the world economy will expand faster than widely expected next year, saying its economists expect sturdy global growth of 2.8% in 2026, versus a consensus forecast of 2.5%. The investment bank said the outlook reflects easing inflation pressures, declining interest rates in advanced economies and resilient demand in large emerging markets.
In its 2026 macro outlook, Goldman Sachs said growth momentum would vary sharply across regions. “US economic growth is expected to accelerate to 2.6%, while China’s GDP expands 4.8% as strong exports outweigh sluggish domestic demand,” the report said, adding that “the euro area economy will increase 1.3%.”
The bank also expects inflation pressures to cool further next year. “Our economists expect core inflation to moderate and policy rates to decline in developed markets in 2026,” the report said, signalling a shift away from the aggressive monetary tightening seen in recent years.
MENA growth to outpace global economy
The Middle East and North Africa region is expected to outperform the global economy in 2026, with GDP projected to grow by 3.6% year on year compared to global growth of 3.1%, according to the Mastercard Economics Institute’s Economic Outlook 2026. The report says growth across MENA will be uneven but supported by public sector investment, resilient consumption and accelerating digital transformation. Qatar is forecast to record the strongest expansion at 4.9%, driven by higher liquefied natural gas production, followed by Egypt at 4.4%. In the UAE and Saudi Arabia, GDP growth is expected at 4.3% and 3.6% respectively, while non-oil GDP in both countries is forecast to be close to 5%. Inflation is expected to remain stable at around 2% in the GCC and slow to an average of 6.7% in oil-importing economies, potentially allowing central banks to ease interest rates as disinflation takes hold.
The report highlights investment, trade diversification and digital transformation as key tailwinds shaping the region’s outlook. It notes that GCC countries are channeling substantial resources into renewables, construction and technology, in line with long-term strategies such as Saudi Arabia’s Vision 2030 and the UAE’s National Strategy for Artificial Intelligence 2031, while oil-importing countries such as Egypt are seeking foreign direct investment in renewable energy. Trade patterns are also shifting, with MENA gradually diversifying away from advanced economies toward other emerging markets. Small and medium enterprises are playing an increasingly important role, with digital tools helping them streamline operations and expand into higher-value, tech-driven services. “Looking ahead to 2026, the economic forecast for the MENA region appears broadly favorable, driven in part by ongoing structural reforms,” said Khatija Haque, chief economist for EEMEA at the Mastercard Economics Institute, while cautioning that geopolitical tensions and climate-related challenges remain key risks to the outlook.
India seen among fastest-growing large economies
India is expected to remain one of the world’s fastest-growing major economies in 2026. According to Goldman Sachs forecasts cited by The Economic Times, the firm “forecasts India’s real GDP growth at around 6.7% in 2026 and 6.8% in 2027, outpacing consensus growth estimates and keeping India among the world’s fastest-growing large economies.”
The forecast places India well above the projected global average and ahead of most advanced economies, supported by domestic demand, infrastructure spending and a relatively stable macroeconomic environment.
China signals policy support as 2026 planning begins
China’s leadership has indicated that fiscal and macroeconomic support will remain a priority in 2026 as the country enters the next phase of its long-term economic planning cycle.
Speaking at the end of 2025, President Xi Jinping said China would “implement more proactive macroeconomic policies in 2026,” adding that the country’s economy was “showing strong resilience and vitality,” according to a Reuters report.
Government advisers quoted by Reuters have also suggested that Beijing is likely to maintain a familiar growth target. “Most government advisers … said they favoured a 2026 growth target of around 5% – the same as this year,” the report said, reflecting official caution amid concerns about deflation, property sector stress and global trade frictions.
Goldman Sachs has revised its China outlook upward, saying it “increased its real GDP forecast for 2026 from 4.3% to 4.8%,” citing stronger-than-expected exports as a key driver of growth.
Interest rates expected to fall in advanced economies
Central bank policy is expected to ease further in 2026 as inflation moderates. Goldman Sachs said “core inflation in developed markets is expected to fall to levels that are broadly consistent with policy targets in 2026.”
The firm added that “the US Federal Reserve is projected to reduce its policy rate by 50 basis points to 3–3.25% in 2026,” while “our economists’ baseline forecast for the UK is a sequence of quarterly rate cuts to 3% by the third quarter of 2026.”
Analysts say these shifts could support investment and consumer spending, though they warn that inflation could re-emerge if supply shocks or geopolitical disruptions intensify.
Commodities and market risks remain in focus
Geopolitical uncertainty is also shaping forecasts for commodities and financial markets. Goldman Sachs analysts have said “gold is projected to be the top-performing commodity in 2026,” with prices expected to rise sharply amid central bank buying and global instability.
According to a report cited by The Times of India, the bank expects that “gold prices will rise to $4,900 per ounce by December 2026,” while noting that “silver is also expected to perform well.”
A cautiously optimistic outlook
Taken together, forecasts for 2026 point to moderate but resilient global growth, underpinned by easing inflation, policy support in key economies and continued strength in emerging markets such as India. At the same time, analysts caution that political uncertainty, trade tensions and regional conflicts could still disrupt the outlook.
As Goldman Sachs put it in its global forecast, the coming year is likely to be defined by “sturdy growth” alongside persistent risks — a balance that policymakers and markets will be watching closely as 2026 unfolds.
