2026 economic outlook: Clear skies but don’t unfasten your seatbelts yet
Most years fade into the background as soon as a new one starts. Not 2025: a year of epochal shifts, in which the macroeconomy was the dog that did not bark. What to expect in 2026? The shocks of 2025 will not be undone, but neither will they be repeated. Instead, their effects will work their way through the system, in ways that are unlikely to be linear and smooth. In the baseline scenario, the macroeconomy will remain a dog that does not bark, either out of alarm or joy. However, there are a few potential path changers to look out for. Chances are, then, that 2026 will not feel any smoother on a day-to-day basis than its predecessor. However, that will not mean good outcomes cannot be reached for those who keep their heads.
Most years fade into the background as soon as a new one starts. Not 2025: a year of epochal shifts, in which the macroeconomy was the dog that did not bark
Contrary to initial fears, there were no recessions –indeed solid growth prevailed almost everywhere– and no out-of-control inflation either. Labour markets proved resilient, and both stock and bond markets offered ju returns, especially in emerging markets. Yet, it was a year of pivotal shocks. Some were truly unexpected shifts, but most crystalised changes that had been years in the making.
The line between friends and foes became blurred. The 80-year-old rules-based multilateral economic order was splintered by its lead architect. US exceptionalism and the dollar’s safe-haven role appeared challenged, and the dollar depreciated by 11% in nominal effective terms, the most since 1973. AI optimism became a key driver of investment and market valuations. The US GENIUS Act brought stablecoins and digital ledger technology (DLT)-based finance into the mainstream. Europe's illusions of global power and sovereignty were shattered, but its ambitions rekindled, and it has started at last to position itself for the massive heave required to deliver. Ultimately, powerful market forces and policy reactions (monetary, fiscal and structural) to the geo-economic shocks offset the uncertainty they caused.
Author
BNP Paribas Team
BNP Paribas
BNP Paribas Economic Research Department is a worldwide function, part of Corporate and Investment Banking, at the service of both the Bank and its customers.
