The global economy faces a year of contrasts in 2026. Allianz Global Investors’ Outlook 2026 shows what investors should prepare for.
• Allianz Global Investors expects global growth of around 2.7 percent in 2026
• Inflation is expected to rise above three percent in the USA and lower in Europe and Asia
• AI-driven investment cycle is considered an important growth driver
The aftereffects of the trade wars shape the picture
In 2026, the global economy will also have to deal with the ongoing consequences of trade wars. As Allianz Global Investors’ Outlook 2026 shows, while tariff escalation has largely peaked, sector-specific measures could continue to strain supply chains. The fragmentation of trade and capital flows leads to different impacts: in the US, reduced supply of foreign goods and rising prices act as a supply shock, while reduced US demand for imports leads to overcapacity in other parts of the world.
Despite these challenges, Allianz Global Investors expects only a moderate slowdown in global growth. Chief economist Christian Schulz forecasts an increase of around 2.7 percent (adjusted for purchasing power), supported by the ongoing AI-driven investment cycle and proactive political responses in key regions. The inflation dynamics will diverge significantly: While the USA has to expect rates of over three percent, Europe and Asia will remain confronted with more subdued price increases – which opens up scope for further interest rate cuts there.
USA: Resilient, but under political pressure
According to Allianz experts, the US economy is robust, although growth of 1.5 to 2 percent is likely to be slightly below potential. The AI investment boom and a moderate fiscal stimulus – expected to be brought forward before the midterm elections in November 2026 – are intended to partially offset the burden of tariffs on real income and traditional business investments.
Inflation is likely to remain stubbornly above three percent, with upside risks from tariff effects. The US Federal Reserve will nevertheless continue its interest rate cutting course and reduce the range to 3.25 to 3.50 percent. However, according to the report, the Fed’s institutional independence is facing a test: legal challenges and political pressure could influence monetary policy decisions. Schulz cites possible Supreme Court rulings and the midterm elections as important event risks, in which the government could seek tax cuts or increased spending to shore up its political support.
Europe and Asia: Different dynamics
A moderate cyclical recovery is emerging for Europe. The growth in the Eurozone is estimated at 1 to 1.5 percent, supported by rising real incomes and low unemployment. Inflation is expected to remain below two percent, allowing the European Central Bank to cut interest rates to 1.75 percent in the first half of 2026. Germany is likely to provide a positive growth stimulus of 0.4 to 0.5 percentage points with fiscal measures. The UK, on the other hand, faces a more difficult path: a possible fiscal consolidation of up to one percent of GDP could push growth below one percent, while the Bank of England is likely to cut interest rates to three percent.
In Asia, growth and inflation remain under pressure. While the technology cycle supports investment and intra-regional trade, conventional trade is suffering from US tariffs. China faces moderating growth as the government looks to boost consumption and prioritize high-tech manufacturing as a growth driver. Japan is continuing its course of orderly reflation, with inflation expected to be around two percent. The Bank of Japan is under political pressure not to raise interest rates too much.
Institutional resilience put to the test
Allianz Global Investors’ outlook summarizes that 2026 could test the global economy’s institutional resilience, policy flexibility and ability to adapt to an increasingly fragmented world. Despite the disruptive impact of trade wars, global growth should remain robust thanks to the AI revolution and proactive policy measures. The divergent inflation developments – rising in the USA, subdued in Europe and Asia – are likely to shape a landscape of asynchronous monetary policy. Geopolitical risks likely remain elevated, particularly with regard to Russia and East Asia, while cautious de-escalation in the Middle East could provide a rare bright spot.
D. Maier / editorial team finanzen.net
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