2027 economic outlook: Resilience to continue, but the risks are building

The global economy has again proven remarkably resilient to a swathe of geopolitical shocks in 2026, and we can expect that to continue into 2027. Still, risks that oil market stress or a disorderly end to the AI boom could end the economic cycle are growing, and we’ve marked down our growth forecasts for 2027.

What you will learn:

• Overall, we forecast global GDP growth to move back into the 2.8% to 3.0% range. We retain a relatively upbeat assessment of the US outlook versus the consensus expectation, but by and large, this doesn’t read-across into above-consensus forecasts for other major economies.
• One of the key determinants of whether growth will rebound next year is what happens to global oil supply and, by extension, the oil price. We now consider the most likely scenario to be simmering tensions between the US and Iran and lower-than-normal traffic in the Strait of Hormuz until at least the end of 2027. However, this needn’t result in oil prices ratcheting higher.
• Meanwhile, worries about the scale of hyperscalers’ liabilities and growing competition from Chinese AI firms point to a new phase in the AI boom: slower investment growth and more volatile stock prices. That would reduce the support AI provides to economic growth, but it doesn’t automatically follow that the boom will turn to bust.
• A major downturn would need a trigger. Further geopolitical instability could be the catalyst, but we’ve long argued that the impact of geopolitical shocks on economic activity is overstated.

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