5 risks for the global economy in 2027

Global growth and inflation in 2027 could be reshaped by an AI-led market correction, renewed supply shocks, geopolitical de-escalation, or a deeper bond-market sell-off.

• A severe AI-driven equity correction could expose weak enterprise demand, excess capacity and higher financing costs, while a further 30% US equity drawdown would erase an estimated $24.5 trillion of household wealth and increase recession risk.
• Energy and labour pressures could produce second-round inflation, with oil reaching $130 per barrel or more and core inflation staying above target, delaying rate cuts and forcing central banks to tighten further.
• Severe El Niño conditions or failures affecting European electricity, payments, communications or cloud services could keep headline inflation near 4% into 2028 and weaken growth.
• A US-led settlement of the Ukraine war and wider Middle East diplomacy could lower oil, diesel and European gas prices, bringing inflation below 2% by summer and accelerating rate cuts.
• US 10-year yields could reach 6% if growth accelerates to 3-4%, fiscal deficits worsen or inflation persists, while French spreads could exceed 200 basis points and spread stress to Italian BTPs.

Takeaway: Investors should prepare for a wide range of 2027 outcomes, from recession and delayed easing to an energy-driven disinflationary boost, with inflation and sovereign bond volatility determining central-bank responses.