Global Economy Outlook for 2026: Goldman Sachs

The global economy is expected to grow at a healthy pace in 2026, according to Goldman Sachs Research. Economists describe the outlook as “sturdy growth,” with most major economies performing at or above market expectations.

US Economy: Stronger Than Expected

Goldman Sachs is more optimistic about the United States than most economists. The US economy is expected to outperform forecasts due to three key reasons:

• Tax cuts that boost consumer spending
• Easier financial conditions
• Lower economic drag from tariffs

Consumers in the US are likely to receive around $100 billion in additional tax refunds in the first half of 2026. This equals about 0.4% of annual disposable income, which should support spending and overall growth.

China Economy: Strong Exports, Weak Domestic Demand

China’s economic outlook is mixed. GDP is expected to grow by 4.8% in 2026, mainly supported by strong exports and manufacturing strength.

China continues to produce higher-quality goods at lower prices than most countries. Its manufacturing sector remains competitive despite higher tariffs, as seen in recent trade negotiations with the US.

However, domestic weakness remains a challenge. The property sector is still under pressure:

• Property sales are down about 60% from their peak
• Property starts are down nearly 80%

Although the worst impact may be over, the property sector is still expected to reduce China’s GDP growth by around 1.5 percentage points in 2026.

Europe: Modest but Stable Growth

The euro area economy is expected to grow by around 1.3% in 2026. While Europe faces long-term challenges and competition from China, growth should be supported by:

• Fiscal stimulus in Germany
• Strong economic performance in Spain

These factors are helping offset weaker industrial momentum in other parts of the region.

Inflation and Interest Rates in 2026

Goldman Sachs economists expect core inflation to ease across developed economies in 2026. As inflation cools, central banks are likely to:

• Cut policy interest rates
• Support economic growth through easier monetary conditions

Big Picture Summary

In simple terms, the global economy in 2026 looks steady rather than fragile. The US is expected to lead growth, China will rely on exports despite domestic weakness, and Europe should see moderate improvement. Lower inflation and falling interest rates could further support growth worldwide.

Overall, 2026 is shaping up to be a year of stable growth rather than crisis for the global economy.