2026 economic outlook in advanced countries: Building on the success of 2025

2026 could prove to be just as turbulent and resilient as 2025 in economic terms. The use of the term “turbulent” is justified considering the geopolitical developments and tensions that have already marked the beginning of this year, and which constitute an additional source of uncertainty (the immediate short-term economic impact is expected to be minimal, with low oil prices offsetting the negative effect of increased uncertainty). The second term reflects a crucial aspect of our baseline scenario. However, it remains to be seen whether the global economy, and advanced economies in particular (the focus of this editorial), will manage to navigate the challenges ahead as they did in 2025. We believe that in 2026 they will succeed, and that resilience will be combined with stronger growth. Nonetheless, this success will not come without certain conditions and risks.

In addition to last week's editorial, which reviewed the major known unknowns and global risks to monitor in 2026 (the Fed, global trade, AI, geopolitics), we now present another set of key questions and developments to watch that will determine whether our scenario materialises. Relations with China (to what extent will they deteriorate?) are also an important part of the equation. These relations impact both advanced and emerging economies, which will be the focus of our editorial next week.

To what extent will Eurozone growth continue to gain momentum and consolidate?

After a commendable economic performance in 2025—where the average annual growth is estimated at 1.5% based on the available quarterly accounts, alongside a growth forecast of 0.3% q/q in Q4 2025—will GDP growth be higher or lower in 2026? Our forecast is positive, predicting a growth rate of 1.6%, which exceeds the December 2025 consensus by half a percentage point. After an average quarterly growth rate of 0.3% in 2025, we anticipate a significant acceleration in growth in 2026, reaching an average quarterly rate of 0.5%. In addition to being higher, Eurozone growth would become stronger This improvement would be attributed to reduced growth disparities among the four largest economies and a greater reliance on domestic demand, which is bolstered by more favourable trends in business investment and household consumption.

Several positive factors are influencing this outlook:

• The fall in inflation, which has approached the target level, thereby enhancing household purchasing power gains in conjunction with the resilience of the labour market;
• Previous policy rate cuts and the ECB's current neutral stance on monetary policy; favourable credit and financial conditions;
• The German stimulus plan and European efforts to rearm and restore competitiveness. Regarding these last two points, the scale and speed of their implementation will be crucial. We are optimistic about this aspect: we have faith in Europe's resurgence, which should also continue to advance the objectives outlined in Draghi's agenda.

However, weak productivity gains and limited fiscal space are likely to continue to constrain GDP growth. A more definitive recovery from the crisis in the automotive and real estate sectors is an upside risk.

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