As the year draws to a close and 2026 approaches, global economists appear to have reached a rare consensus on the economic outlook. All agree on one thing: 2026 will not be a year of collapse, but it will not be a year of boom either. Instead, forecasters believe 2026 will test the world’s ability to manage slow growth and easing inflation while simultaneously battling geopolitically induced disruptions.
The International Monetary Fund (IMF) estimates global growth will hover around 3 per cent in 2026—slightly higher than in 2025 but well below the long-term average seen before 2020. Global growth stood at 3.3 per cent in 2024. Similarly, the Organisation for Economic Co-operation and Development (OECD) projects global growth at 2.9 per cent in 2026, citing geopolitical uncertainty, weak trade, and tariffs as key drags.
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The IMF has also warned that global government debt is expected to rise above 100 per cent of GDP by 2029, reaching its highest level since 1948.
India: The standout performerAmong major economies, India remains the clear growth leader. Once again, India is poised to emerge as the bright spot in the global economy. According to the IMF and other multilateral institutions, India’s GDP growth is expected to be around 6.4–6.5 per cent in 2026.
Crisil, however, is more optimistic, projecting growth at 7 per cent. “We expect GDP to grow at 7 per cent in fiscal 2026, compared with 6.5 per cent in fiscal 2025,” the ratings agency said.
A recent report by Standard Chartered adds that it is not just robust growth but a likely revival in domestic demand that could set 2026 apart.
Policy stimulus, front-loaded rate cuts, liquidity injections, income tax reductions in the Union Budget, and potential GST rate cuts together make a revival in domestic demand more likely—an area that has remained muted for several years.
Inflation, another major concern, is also expected to trend below the Reserve Bank of India’s 4 per cent target, supported by modest crude oil prices.
United StatesAccording to a recent Goldman Sachs report, the US economy is “expected to substantially outperform consensus estimates,” driven by tax cuts, easier financial conditions, and a reduced fiscal drag.
The report pegs US growth at around 2.6 per cent in 2026. In contrast, Deloitte and Fitch Ratings estimate growth at a more modest 1.9 per cent.
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“Much of that growth is expected to be concentrated in the first half of the year, with domestic demand slowing in the second half. However, risks are tilted to the downside, and other scenarios could easily materialise,” Deloitte said in its outlook.
On interest rates, economists broadly agree that the US Federal Reserve still has room to cut rates, though the pace of easing will be critical. “Policymakers will slow the pace of easing in the first half of next year as economic growth reaccelerates and inflation cools,” Goldman Sachs noted.
The US labour market is expected to remain stable but less tight, with slower job creation and softer wage growth. Analysts say this could help contain inflation but may also dampen consumer demand—a delicate balancing act for the world’s largest economy.
Europe’s slow recoveryEurope is likely to emerge as a laggard on the growth front. With projections in the range of 1–1.3 per cent, the region is expected to struggle with structural slowdown. High energy prices, subdued industrial output, and weak exports are likely to weigh on growth.
Italy is projected to grow at just 0.6 per cent, while Poland is expected to expand by 3.4 per cent in 2026. According to the OECD, Spain is set to grow at the fastest pace among the top five European economies, at 2.2 per cent. Germany’s growth is projected to improve from 1 per cent in 2025 to 1.5 per cent in 2026.
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China’s moderate growthChina is expected to grow between 5 and 5.5 per cent in 2026, according to several projections. While this represents a modest slowdown, it remains strong by global standards.
UBS forecasts that China’s growth will slow to around 4.5 per cent. “We expect exports to decelerate in 2026, leading to a much narrower growth contribution from net exports,” the bank said.
Amid tariff pressures and trade uncertainty, China’s exports are expected to take a hit, weighing on growth.
The UN Conference on Trade and Development (UNCTAD) projects China’s growth will decline from 5 per cent in 2025 to 4.6 per cent in 2026, compared with an average of 6.7 per cent growth before the pandemic. Deloitte has also pegged China’s growth at 4.5 per cent, citing the continued downturn in the property sector.
Nomura, meanwhile, expects China to grow at 4.3 per cent in 2026
