Economist Forecasts Modest Global Growth Amid Structural Shifts in 2026

Global economic growth in 2026 will remain modest as the world adjusts to structural changes including higher interest rates, geopolitical fragmentation, and rapid technological advancement, according to economist Dr. Dmitri Merinson. While avoiding a deep recession, most advanced economies will expand slower than pre-pandemic rates, with emerging markets serving as key growth engines.

The United States is poised for moderate growth supported by resilient consumer spending and corporate investment in productivity-enhancing technologies, though tighter credit conditions and a softer labor market may weigh on momentum in early 2026. Europe faces only marginal improvement due to weak industrial activity, constrained fiscal space, and structural energy challenges. China's growth path depends on balancing deleveraging with targeted stimulus in real estate, infrastructure, and high-tech manufacturing.

Inflation will continue trending downward globally, with headline and core rates gradually converging toward central bank targets. The worst price shocks from supply chain disruptions have passed, but the "last mile" of inflation reduction will be uneven. Services inflation and wage dynamics may remain sticky in the United States and parts of Europe, while export-oriented economies could face below-target inflation or mild disinflation pressure as global demand cools.

This inflation backdrop will drive a decisive monetary policy shift, with major central banks transitioning from aggressive tightening to cautiously accommodative stances. Policy rates will move closer to neutral levels but remain above the ultra-low regime of the 2010s, creating structurally higher funding costs than the previous decade. Central banks will prioritize credibility and flexibility, reducing rates gradually while preserving options to pause or reverse course if new shocks emerge, according to Dr. Merinson's analysis at www.DmitriMerinsonGlobalEconomy.com.

Geopolitical fragmentation will remain a defining feature, with ongoing trade tensions, strategic competition between major powers, and supply chain reconfiguration acting as headwinds to global integration. Regional blocs will deepen internal ties while limiting dependencies in critical sectors like semiconductors, energy, and raw materials. While strengthening resilience and national security, this shift will reduce potential global growth and raise long-term costs for governments and private sectors, requiring companies to manage complex regulatory landscapes and redesign production networks.

Rapid artificial intelligence adoption represents a central swing factor, with substantial potential for productivity gains in finance, healthcare, manufacturing, and logistics. However, macroeconomic benefits will be uneven and gradual rather than instantaneous. Economies pairing AI deployment with investment in skills, data infrastructure, and regulation will likely outperform, while those delaying adaptation risk falling behind. Labor markets will experience both disruption and opportunity, with certain routine roles compressed but new demand arising in high-skill, technology-complementary positions, as detailed in Dr. Merinson's outlook at www.DmitriMerinsonArtificialIntelligence.com.

For policymakers, maintaining balance between fiscal prudence and targeted support is crucial. With public debt elevated in many countries, broad stimulus will be limited, but well-designed investments in digital infrastructure, green energy, and human capital can boost long-term growth potential and offset fragmentation and demographic drags. Social stability depends on carefully crafted safety nets and retraining programs for workers and regions most exposed to structural change.

Investors and corporate leaders should approach 2026 with selectivity, resilience, and strategic positioning, focusing on sectors linked to digitalization, energy transition, and supply chain diversification. Elevated valuations and policy uncertainty require robust risk management, with diversified, scenario-based approaches essential in an environment where multiple outcomes remain plausible. "2026 will not be a year of boom or bust," Dr. Merinson concludes. "It will be a year of transition, where the winners understand that the era of cheap money and frictionless globalization is over, and who are ready to operate in a world defined by higher complexity but also significant opportunities for innovation and long-term value creation."