Growth exceeding expectations suggests a stable outlook in the United States and Europe.

At the start of 2026, the global economic outlook appears more favorable than initially anticipated. Growth in major economies, from the United States to Europe and China, exceeded our expectations in 2025. Forward-looking surveys also indicate expansion. Despite the lingering effects of US tariffs on consumption and trade, global growth is expected to remain close to its potential and broadly stable compared to 2025 levels.

The US, European, and, to a lesser extent, Swiss economies all performed better than expected in 2025. Therefore, for 2026, we have raised our growth projections for the US and the Eurozone to 2.2% and 1.5%, respectively. Key factors include the continued strength of the private sector, the anticipation of a resumption of interest rate cuts by the US Federal Reserve in the second half of 2026, and the fact that the European Central Bank has already reduced its key interest rate to a neutral level. Furthermore, a slight fiscal stimulus is evident in the US, and a more pronounced one is emerging in Germany, Europe’s largest economy.

We expect US growth to stabilize rather than accelerate.

Our outlook for the US economy in 2026 has therefore shifted from a slowdown scenario to one of more stable growth. The US demonstrated resilience in 2025, with tariffs having a less damaging impact than initially feared, thanks to a series of exemptions and agreements that reduced the tariffs applied. Should the Supreme Court uphold the illegality of some tariffs, their impact would be further diminished, although most of these tariffs could be reintroduced through other legislation. While the US labor market continues to slow, we see no signs of a recession. January credit card data indicated healthy consumer spending growth, and fiscal stimulus is expected to provide moderate support to domestic demand. However, given the current situation in the job market, namely a lack of both recruitment and layoffs, we do not anticipate a surge in consumption such as has been observed previously, driven by gains in the financial markets.

For these reasons, we expect US growth to stabilize rather than accelerate. With inflation, excluding tariff-rate goods, continuing to decline, we still anticipate three interest rate cuts by the Fed in the second half of the year. For the full year, we expect average inflation of 2.5% for the US economy.

In the euro area, our economic outlook reflects stronger-than-expected growth, historically low unemployment, and increased business confidence. Overall, these factors will keep the region’s growth slightly above its potential. These trends are supported by the European Central Bank’s neutral policy rate, following 200 basis points of cumulative cuts, as well as by German fiscal stimulus measures, which are creating significant momentum already visible in defense and infrastructure spending.

In the euro area, our economic outlook reflects stronger-than-expected growth, historically low unemployment, and increased business confidence.

Switzerland has managed to avoid the worst-case scenario of persistently high tariffs, and this year its growth will be close to that of 2025, at 1.2%. The country now faces the challenges posed by a strong currency, although its exchange rate against the euro is more significant than against the dollar, and by its impact on inflation, which we now project at an average of 0.5%. From our perspective, only an extreme event could force the Swiss National Bank to lower its interest rates into negative territory; the SNB will instead favor interventions in the foreign exchange market to contain the appreciation of the Swiss franc.

We expect China to deploy fiscal support to ensure short-term stability and recently raised our 2026 growth forecast to 4.3 percent. Domestic demand remained weak in the second half of 2025, but the planned meeting between Presidents Trump and Xi Jinping in April, along with a slight appreciation of the yuan, will help preserve the country’s external balance and limit future trade tensions. Despite US barriers, exports performed exceptionally well last year, although they are expected to slow in 2026.

Local governments should begin investing the funds accumulated through their bond issuances in infrastructure projects, which will foster a recovery in economic activity. US endorsement of semiconductor exports is hindering China’s ambitions for self-sufficiency but bodes well for the deployment of AI, including investments in data centers. Inflation is expected to rise slightly, and we anticipate the central bank will ease monetary policy again, while refraining from measures that would put downward pressure on the currency.