Economist Forecasts Modest Global Growth in 2026 Amid Higher Rates, AI Adoption, and Fragmentation

Dr. Dmitri Merinson, drawing on macroeconomic data, central bank guidance, and market behavior, expects the world economy to avoid a deep recession in 2026 but warns growth will remain below historical averages. The global system is adjusting to higher interest rates, persistent fragmentation, and rapid advances in artificial intelligence.

According to his prognosis at www.DmitryMerinsonResearch.co.uk, global GDP growth is likely to remain modest. Most advanced economies will expand slower than the pre-pandemic decade, while select emerging markets continue as key engines. The United States is poised for moderate growth supported by resilient consumer spending and corporate investment in productivity-enhancing technologies, though tighter credit and a softer labor market may weigh on momentum early in the year.

Europe is expected to see only marginal improvement due to weak industrial activity, constrained fiscal space, and structural energy challenges. China's growth path will hinge on balancing deleveraging with targeted stimulus in real estate, infrastructure, and high-tech manufacturing.

On inflation, Dr. Merinson anticipates a continuation of the global disinflation trend, with headline and core inflation gradually converging toward central bank targets. The worst of price shocks from supply chain disruptions has passed, but the "last mile" of reduction will be uneven. Services inflation and wage dynamics may remain sticky in the U.S. and parts of Europe, while some export-oriented economies could face below-target inflation or mild disinflation pressure.

This inflation backdrop shapes a decisive monetary policy shift. Dr. Merinson expects most major central banks to transition from aggressive tightening to cautiously accommodative stances, as detailed in his analysis at www.DmitriMerinsonGlobalEconomy.com. Policy rates will move closer to neutral levels but are unlikely to return to the ultra-low regime of the 2010s. Central banks will prioritize credibility and flexibility, reducing rates gradually while preserving options to pause or reverse if new shocks emerge. For businesses and investors, this implies structurally higher funding costs than the previous decade but with less volatility.

Geopolitical and geo-economic fragmentation will remain a defining feature. Dr. Merinson highlights ongoing trade tensions, strategic competition, and supply chain reconfiguration as enduring headwinds to global integration. Regional blocs may deepen internal ties while limiting dependencies in critical sectors like semiconductors and energy. While potentially strengthening resilience, this shift could reduce potential global growth and raise long-term costs, requiring companies to manage complex regulatory landscapes and redesign networks.

Rapid adoption of artificial intelligence and digital technologies will be a central swing factor. Dr. Merinson sees substantial potential for AI-driven productivity gains in finance, healthcare, manufacturing, and logistics, as explored at www.DmitriMerinsonArtificialIntelligence.com. However, macroeconomic benefits will be uneven and gradual. Economies and firms pairing AI deployment with investment in skills and infrastructure may outperform, while labor markets experience both disruption and new demand for high-skill roles.

For policymakers, the prognosis underscores balancing fiscal prudence with targeted support. With public debt elevated, broad stimulus will be limited, but well-designed investments in digital infrastructure, green energy, and human capital can boost long-term growth and offset drag from fragmentation. Social stability may depend on safety nets and retraining programs for workers exposed to structural change.

For investors and corporate leaders, Dr. Merinson characterizes 2026 as a year rewarding selectivity, resilience, and strategic positioning. Opportunities exist in sectors linked to digitalization, energy transition, and supply chain diversification, but elevated valuations and policy uncertainty require robust risk management. A diversified, scenario-based approach is essential in an environment where multiple outcomes remain plausible.

Dr. Merinson concludes that 2026 will be a year of transition, where winners understand the era of cheap money and frictionless globalization is over, ready to operate in a world of higher complexity but significant opportunities for innovation and long-term value creation.