The 2026 global outlook: Stability meets “hidden” friction

The global economy in 2026 will be defined by a state of deceptive stability, where the “settled dust” of headline growth figures masks a series of profound structural shifts in trade, technology, and monetary policy, according to Fitch Solutions’ research unit BMI. Global real GDP growth is projected to land at 2.5%, marginally below the 2.6% estimated for 2025. While this suggests a return to a predictable macro environment, nine “hidden” risks — from US intervention in Venezuela to the cooling of the AI investment cycle — threaten to rock the boat, BMI says.

The primary takeaway for 2026 is not that the volatility of the early 2020s has vanished, but rather that the “shocks” of the previous five years — from aggressive interest rate hikes to radical trade realignment — have now become the baseline reality.

This “new normal” is defined by a global easing of inflation and a subsequent stabilization in monetary policy support. Most central banks are expected to reach their terminal rates by 2026, marking the end of the most aggressive tightening and easing cycles in recent memory. While this suggests a more predictable cost of capital, BMI notes that this “settled” environment creates its own set of challenges.

What to look for under the hood

The danger for 2026 is a sense of complacency driven by the steady headline data. The report identifies nine under-appreciated or less well-recognized risks and surprises that could disrupt the consensus view. These “hidden” factors are designed to alert readers to alternative scenarios that exist across multiple geographies and industries, moving beyond the standard macro predictions that most of the market is currently pricing in.

Among the risks (and upside) lurking in the shadows: BMI identifies a handful of potential risks and positive scenarios that could shape the year ahead. These include the shift toward US-led “grand bargains” with China and Russia that risks alienating traditional allies, fragmenting global supply chains, and sparking trade protectionism. Meanwhile, the global landscape could face critical vulnerabilities from crumbling Antarctic treaties, widening vaccine immunity gaps, increasingly uninsurable cyber risks, and the struggle of aging Asian economies to secure essential skilled talent.

Also worth looking out for: The US’ fiscal health, as the country could be looking at a “financial repression” shock in 2026, BMI suggests. Public debt sits at nearly 100% of GDP and net interest outlays set to top USD 1 tn in 2026, while fiscal deficits are at 6.0% and the gross federal debt is at USD 38.4 tn. “This arithmetic collides with a heavy maturity calendar and large gross issuance, keeping the Treasury market acutely sensitive to funding conditions,” BMI says.

AI bust? Adding fuel to the fiscal fire is a physical bottleneck in the AI shift. Surging electricity demand from data centers is hitting the hard limits of the US, UK, and the EU’s power grid. BMI warns that 2026 could see “processing power” rationed, with wholesale electricity prices spiking by 25-200% at key nodes, potentially adding 0.3-0.5 percentage points to headline CPI. This will complicate the path towards inflation targets, and disrupt the investments and fiscal sustainability trajectory.

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MARKETS THIS MORNING-

Asia-Pacific markets are starting off the week on mixed footing, with investors keeping an eye on China’s 4Q 2025 GDP figures and other key data, as well as Washington’s continued drama over Greenland. Japan’s Nikkei and the Hang Seng Index are both in the red, while the Shanghai Index and South Korea’s Kospi are trading up. Wall Street futures suggest a muted start to the trading day across the pond, after closing a losing week on Friday.

THE CLOSING BELL-

The EGX30 rose 1.4% at yesterday’s close on turnover of EGP 2.8 bn (47.8% below the 90-day average). Regional investors were the sole net sellers. The index is up 5.1% YTD.

In the green: Egypt Aluminum (+6.6%), Credit Agricole (+6.2%), and Raya Holding (+6.2%).

In the red: Telecom Egypt (-0.4%) and Orascom Development (-0.4%).