Are Economic Trends Accelerating or Slowing?

2025 is drawing to a close, and the uncertainties that plagued us at the beginning of the year have become certainties. However, standing at the end of 2025, we remain filled with confusion and doubt about the global economic trajectory in 2026. Yes, time is the best way to dispel uncertainty, but as long as there is a future, uncertainty will always exist. The global economy has not fully fallen into recession, but the recovery has been weak and of low quality, making it vulnerable to external shocks. The report predicts that global economic growth will further slow to 2.6% in 2025, a decline from 2.9% in 2024. The momentum of global economic growth continues to weaken, with a slowdown in growth: from 3.3% in 2024 to 3.2% in 2025, and then to 3.1% in 2026. This series of downward adjustments clearly indicates that the retaliatory rebound after the COVID-19 pandemic has ended, and the global economy is returning to a lower growth trajectory. Behind this is the combined effect of the lagged effects of monetary policy tightening in major economies, debt pressures, and structural problems such as slowing productivity growth.

Global Economic Outlook for 2026

Entering 2026, the global economy is expected to exhibit characteristics of "synchronized slowdown and a zero-sum game." Overall, it will present the following three points:

1. Slight slowdown in growth but not a "hard landing":

     The IMF, OECD, and other institutions project a growth rate of around 3% for 2026, a "low but still acceptable" state;

2. Developed economies and emerging economies will continue to grow at different paces:

     The former, constrained by high interest rates, fiscal contraction, and an aging population, will see growth of around 1.5%; the latter, particularly some Asian economies, will remain the main contributors to global growth;

3. Increased sensitivity of the global economy to policy and shocks:

     Trade policy adjustments, escalating geopolitical conflicts, and climate disasters could all cause actual growth to deviate from the baseline scenario by 0.2–0.5 percentage points.

Economic Slowdown

The report analyzes that global growth is shifting from a sluggish state to a deeper downturn, primarily due to a combination of factors including weak global demand, weak private investment, a sluggish manufacturing cycle, and the transmission of low growth from developed economies to the global scale.

Insufficient Demand and Investment

From the demand side, the problem of insufficient momentum is prominent. Global demand remains weak, and the recovery in consumption and investment appears sluggish. The report reveals that domestic spending in many economies is sluggish, and household purchasing power is under pressure. In particular, high interest rates have a significant suppressive effect on economic activity and domestic demand, becoming a key factor leading to weakened demand and sluggish growth. The suppressed demand further contributes to weakness in global manufacturing and insufficient momentum in global trade.

On the other hand, investment momentum is also insufficient. Both private investment and fixed capital formation are showing a weak trend. Weak fixed investment and sluggish private sector investment have made businesses vulnerable to high financing costs and uncertainty about profit prospects, lacking the willingness to resume expansion and generally postponing capital expenditures. This situation results in a lack of investment sources to drive the next round of growth, eroding long-term growth potential.

The main risks facing the global economy in 2026 can be summarized as follows:

1. The "double whammy" of high interest rates and high debt:

Although interest rates have begun to decline, the high debt stock means that emerging economies still face enormous debt repayment pressure, and the probability of triggering localized debt crises cannot be ignored;

2. Escalation of trade conflicts and geopolitics:

Tariff escalation, expanded sanctions, or worsening regional conflicts could amplify global volatility through trade, energy, and financial channels;

3. The impact of climate and energy transition:

Extreme weather, commodity price volatility, and the uneven implementation of green transitions could all become black swan or gray rhino events for the economy and markets;

4. Uncertainty in technology and regulation:

The regulatory framework for technologies such as AI and big data is not yet fully formed. Systemic security incidents or significant tightening of regulations could impact market sentiment and investment direction.

Countermeasures and Recommendations

Given the current fragility and multiple risks to the global economy, the report recommends comprehensive measures to address the challenges. First, it is necessary to stabilize macroeconomic and financial conditions, avoid excessively tight monetary policy, expand fiscal policy space, and strengthen international coordination. Secondly, the global financial architecture should be reshaped to reduce financing costs and enhance developing countries' access to funds. Furthermore, building a development-centric trade system, reducing uncertainty, and strengthening multilateral cooperation are also necessary measures. Simultaneously, climate and debt risks should be actively addressed, climate finance should be expanded, and debt structures should be reformed.

Through these significant policy shifts, we can hope to guide the global economy back to a more balanced and sustainable growth path. The report specifically points out that the synergy of trade and financial policies is crucial. In the context of the intertwining of global trade and finance, a single policy tool cannot achieve maximum effectiveness. Therefore, coordination and linkage between different policy areas become particularly critical.