Economic outlook 2026-2027 in advanced countries: Solidity test

After a year marked by global economic resilience and ending on a note of optimism, 2026 looks promising and could be a year of solid economic performance. In our baseline scenario, we expect most of the supportive factors at work in 2025 to continue to play a role in 2026 (favorable economic policy, AI, low oil prices), and even to gain momentum in the case of the German stimulus plan and European rearmament efforts. Growth in the Eurozone would thus stand out as stronger (1.6% in 2026 and 2027 after 1.5% in 2025), while US growth would stabilize at a rate close to but below 2%. Fiscal policy would, strangely enough, be both a factor supporting and hindering growth. Monetary policy would be favorable (in 2026, neutral status quo in the Eurozone; less restrictive in the United Kingdom and even accommodative in the United States after a further rate cut), except in Japan, where the BoJ would continue its very gradual tightening and monetary policy would progressively become less accommodative.

At the end of 2025, a feeling of optimism prevails, at least on the financial markets. There are signs of nervousness and sources of concern, with occasional bouts of tensions, but at the time of writing, risk appetite is generally high. This positive sentiment spills over into 2026, which, for the moment, looks promising. The positive mood is based on the resilience shown by the global economy (both advanced and emerging countries) in the face of the double shock of US tariffs and uncertainty, a resilience that is itself based on a combination of factors.

First, monetary policy has continued to ease overall, with the Federal Reserve, in particular, resuming its rate cuts. Second, and related to this, global financial conditions have remained favorable, combining thriving equity markets, a downward trend in the US dollar and oil prices, and tighter credit spreads. The generally solid balance sheets of private financial and non-financial agents (both businesses and households) were another favorable mitigating factor. Finally, global trade itself held up better than expected, fueled by the rapid reorientation of trade flows to adapt to the US tariff shock. This shock was also not as severe as Donald Trump's announcements had suggested. There are numerous exemptions, and trade deals have been negotiated. The resilience of growth and global trade and the equity markets’ bullishness have an important common driver, another of the notable developments of 2025: the AI boom, the wave of investments and the associated wealth effects. We will end this list with a factor specific to Europe: the double positive signal sent by the German fiscal turnaround and the European defense plan, combined with various and varied progress, still tentative but real, aimed at strengthening the EU. Much remains to be done, but this has sent a positive signal for growth. This EU revival is one of the good news of 2025. It is a positive shock that should be highlighted in the face of the double negative shock coming from the US.

In our baseline scenario, we expect most of these supportive factors to continue to play out in 2026 (favorable economic policy, AI, low oil prices), and even to gain momentum in terms of the German stimulus plan, European rearmament efforts and, more broadly, the implementation of Draghi's agenda of reforms. Combined with a currently rather positive economic momentum and diminishing uncertainty, all of this would make 2026 more than just another year of resilience for the advanced economies covered in this issue[1][2]: performance would be driven by the solidity of expected economic growth. The horizon remains distant and even more uncertain than 2026, but 2027 would extend this performance, according to our initial projections for that year.

Download the Full Report!