World Economic Prospects
Each month Oxford Economics’ team of 450 economists updates our baseline forecast for 200 countries using our Global Economic Model, the only fully integrated economic forecasting framework of its kind. Below is a summary of our analysis on the latest economic developments, and headline forecasts. To access the full report (and much more), request a free trial today.
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Geopolitics unlikely to derail solid growth outlook
- Slight upward revisions to world GDP in 2025 have mechanically raised our forecast for growth in 2026 by 0.1ppt to 2.8%. But the broad story is of an unchanged outlook – after a soft end to 2025, we expect a resumption of steady but unspectacular GDP growth this year.
- The likely weak finish to 2025 for the global economy can be attributed to slowdowns in the US and China. However, we think this end-of-year softening is temporary rather than an indication that both economies are moving to a significantly lower growth path.
- In the US, the long government shutdown triggered weaker activity last quarter. However, Q4’s expected growth of 2.3% q/q annualised would still be solid. Given that the bulk of the shutdown-affected activity has been delayed rather than lost, a strong start to 2026 is likely. We expect investment-focused stimulus to deliver a small growth rebound in China, too.
- Events in Venezuela and US policymakers’ comments on Greenland suggest 2026 is likely to be another year of heightened global uncertainty. However, there’s a tendency to overstate the threat to economic activity from geopolitical instability.
- Global GDP growth over the past three or four years has remained stable despite numerous geopolitical shocks and lingering uncertainties. Similarly, the number of economies contracting in any quarter has been unremarkable historically. Unless geopolitical threats lead to sharp and sustained increases in commodity prices or a global financial market sell-off, such uncertainties are unlikely to be the primary driver of global growth in 2026.
- By contrast, we’ve regularly argued that the importance of fiscal policy is often understated as a driver of growth. Our own estimates point to a broad-based and positive fiscal impulse in 2026, which supports the view that Q4’s weakness is temporary and that global growth should hold up this year.
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