Global GDP Themes and Forecasts

Global growth should remain resilient through 2026 and into 2027, with earnings, AI investment and fiscal support outweighing energy, geopolitical and consumption risks.

• In the United States, strong corporate earnings, resilient spending and fiscal policy support growth, while stable employment argues against a major layoffs wave; the Fed is expected to remain on hold for the rest of 2026 before eventually cutting rates.
• European growth is expected to accelerate as the region enters an early credit cycle supported by monetary policy, fiscal stimulus and improving financial conditions, although energy disruptions and the Strait of Hormuz closure have led Loomis Sayles to move from constructive to neutral on the euro.
• Latin America has a favorable market backdrop: Colombia is expected to move toward fiscal consolidation, Peru could benefit from renewed political stability, Argentina received another credit upgrade in July, and Brazil combines high carry, diversified commodities production and strong external buffers ahead of its election.
• Asia presents diverging outcomes: AI demand supports exports and economies such as Malaysia and Singapore, Korea's KOSPI remains up 35% year to date despite a semiconductor selloff, while Thailand's trade deficit, Indonesia's policy uncertainty and China's weak consumption remain risks.
• Japan is growing above potential as AI capital expenditure, domestic investment, labor scarcity and automation support productivity, whereas China's recovery remains K-shaped, with exports, AI, renewables and robotics strong but consumption, property and domestic investment weak; higher energy prices also threaten Gulf activity and European industry.

Takeaway: The authors favor risk assets and expect the global equity rally to continue through year-end and into 2027, driven mainly by earnings rather than valuation expansion, but investors should account for energy shocks, geopolitical escalation, political events and significant regional divergences.