Global Economic Outlook: Navigating Uncertainty in 2026
The global economy enters 2026 amidst a complex interplay of regional strengths and weaknesses. International credit insurer Coface forecasts a global growth rate of +2.6%, a slight deceleration from the +2.8% observed in 2025. This outlook is shaped by persistent geopolitical tensions, financial risks, and rising social unrest.
Resilience Amidst Shocks
Despite a challenging international environment, the global economy demonstrated remarkable resilience in 2025. According to Coface economist Markus Kuger, the actual economic burdens were less severe than initially anticipated, particularly concerning trade conflicts and tariffs. The adaptability of internationally-oriented businesses contributed to this positive outcome, highlighting the continued strength of global economic interconnectedness.
Mounting Pressures for 2026
However, 2026 begins with significant headwinds. Geopolitical risks are already materializing in regions like Latin America, Iran, and Greenland. Financial risks are amplified by high debt levels and tight capital markets, coupled with sustained high interest rates. Macroeconomic uncertainties stemming from US economic policy and potential trade disputes add further complexity. Social tensions, particularly in Europe, are exacerbated by health and climate-related challenges.
Regional Economic Performance: A Mixed Bag
Despite these challenges, global economic growth is expected to remain relatively stable at +2.6%, albeit with considerable regional variations.
United States: Steady Growth
The US is projected to grow by 2.2% in 2026, supported by robust consumer spending. This growth occurs despite a recent increase in corporate insolvencies.
Eurozone: Moderate Expansion
The Eurozone is anticipated to experience around 1% growth, driven primarily by investment programs in Germany. France, however, is expected to see only modest gains due to its substantial budget deficit.
Central and Eastern Europe: Robust Dynamics
Central and Eastern Europe demonstrates strong momentum, with Poland leading the way at a projected growth rate of 3.8%.
Asia: China Slowdown, India’s Rise
Growth in Asia is cooling, with China’s expansion slowing to 4.4%, impacting regional momentum. India, however, is solidifying its position as a key global growth driver with a forecast of +6.1%.
Energy Prices and Inflation
Falling energy prices are expected to provide some relief throughout the year. Coface anticipates the price of oil to decrease from an average of $68 per barrel in 2025 to approximately $60 in 2026, based on moderate demand and increased supply. This decline is expected to have a neutral impact on inflation, which is easing in many regions.
Country Risk Adjustments: A Shifting Landscape
Coface has adjusted its country risk assessments for seven nations, including six upgrades.
Upgrades Reflect Positive Developments
- Chile: Upgraded from A4 to A3 due to increased investment in the copper and energy sectors and a stable institutional framework.
- Poland: Improved from A4 to A3, fueled by high investment levels from EU funds and strong consumer demand.
- Sweden: Elevated from A3 to A2, supported by resilient private consumption, a recovering labor market, and expansionary fiscal policy.
- Cyprus: Raised from A4 to A3, benefiting from a record year in tourism and increased investment from European programs.
- Barbados: Improved from C to B, following fiscal consolidation and reduced government debt.
- Ecuador: Upgraded from D to C, after stabilizing following the 2024 energy crisis and implementing reforms supported by the International Monetary Fund (IMF).
Senegal Downgrade
Senegal was the only nation downgraded, moving from B to C due to significant fiscal imbalances and an unsustainable debt burden, complicating negotiations with the IMF.
FAQ
Q: What is the projected global growth rate for 2026?
A: 2.6%
Q: Which region is expected to experience the strongest growth in 2026?
A: India, with a projected growth rate of 6.1%.
Q: What is driving the downgrade of Senegal’s country risk assessment?
A: Significant fiscal imbalances and an unsustainable debt burden.
Q: What is Coface’s outlook for oil prices in 2026?
A: An average of $60 per barrel, down from $68 in 2025.
Pro Tip: Regularly monitor country risk assessments to inform your international business strategies and mitigate potential financial losses.
Explore the full Risk Review and country risk assessments at www.coface.de.
