Global growth proved more resilient than expected in 2025, holding steady at around 2.8% despite political and trade uncertainty following Donald Trump’s return to the White House, according to Oxford Economics’ 2026 global outlook. Looking ahead, the global economy faces a set of intertwined challenges — from shifting trade dynamics to the uncertain path of AI investment and fiscal policy.

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Trade tensions are entering a new phase: After a year dominated by tariff hikes, the focus in 2026 is shifting toward their long-term ripple effects. The US economy is likely to remain relatively insulated, supported by strong household spending and looser fiscal policy. But higher tariffs are expected to weigh on imports, limiting the extent to which US demand can lift global trade. China, on the other hand, is doubling down on manufacturing-led growth and boosting exports even under heavy tariff pressure — a trend that’s driving down global prices and increasing competition in advanced economies. As Chinese exporters move further up the value chain, deflationary pressures are set to hit manufacturers in Europe and North Asia hardest.

AI could either steady or shake global growth: AI investment has been one of the biggest drivers of growth over the past year, cushioning the US economy and fueling demand across Asia’s semiconductor and tech sectors. But 2026 could be more volatile, as analysts see room for another surge in AI-related capital spending that could push US GDP growth as high as 3%, compared to a baseline forecast of 2.3%. Still, the boom is entering a riskier phase as financing shifts from banknotes to debt. A sudden correction could slow the US growth to below 1%, with global spillovers to follow.

Fiscal policy takes center stage: While interest rate cuts will continue at a measured pace, they’re unlikely to have a major impact on global growth in 2026. Fiscal policy, not monetary easing, will be the key driver. Despite concerns about debt sustainability in the US, UK, and parts of Europe, governments are expected to keep spending relatively loose, with a slightly positive global fiscal impulse led by China. The bigger risk is not tightening, but rather fiscal expansion — particularly if major economies opt to support growth through higher spending.

Global GDP growth is expected to remain around 2.7% next year — steady overall but uneven across regions. The US is set to remain the outlier, supported by fiscal spending and AI investment. China’s growth is expected to stabilize, though at the cost of intensifying competition for manufacturers elsewhere. Europe and Japan will continue to lag as long-term structural challenges persist. Behind the stable headline numbers, 2026 will see deeper global imbalances and different paths for major economies.

MARKETS THIS MORNING-

Asian markets are firmly in the green this morning with indices riding the tech-driven rally on Wall Street. Japan’s Nikkei is leading gains, up 2.0%, with the Kospi trailing behind, up 1.9%. The Shanghai Composite and Hang Seng are looking at more modest gains.

TASI

10,687

-1.5% (YTD: -11.2%)

MSCI Tadawul 30

1,398

-1.3% (YTD: -111.7%)

NomuC

24,054

-0.2% (YTD: -23.6%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

4.5% repo

4.0% reverse repo

EGX30

39,903

+0.5% (YTD: +34.2%)

ADX

9,761

-0.1% (YTD: +3.7%)

DFM

5,823

-0.1% (YTD: +13.0%)

S&P 500

6,766

+0.9% (YTD: +15.0%)

FTSE 100

9,610

+0.8% (YTD: +17.6%)

Euro Stoxx 50

5,574

+0.8% (YTD: +13.9%)

Brent crude

USD 62.48

-1.4%

Natural gas (Nymex)

USD 4.48

+0.1%

Gold

USD 4,171

-0.1%

BTC

USD 87,366

-1.1% (YTD: -6.5%)

Sukuk/bond market index

919.28

+0.1% (YTD: +1.9%)

S&P MENA Bond & Sukuk

152.23

0.0% (YTD: +8.8%)

VIX (Volatility Index)

18.56

-9.6% (YTD: +7.0%)

THE CLOSING BELL: TADAWUL-

The TASI fell 1.5% yesterday on turnover of SAR 4.0 bn. The index is down 11.2% YTD.

In the green: Amak (+7.7%), Bonyan Reit (+3.0%) and Taiba (+2.3%).

In the red: AZM (-6.1%), Alrajhi Takaful (-5.7%) and ELM (-5.7%).

THE CLOSING BELL: NOMU-

The NomuC fell 0.2% yesterday on turnover of SAR 19.3 mn. The index is down 23.6% YTD.

In the green: Naba Alsaha (+9.9%), Horizon Educational (+8.0%) and Service Equipment (+7.1%).

In the red: NAF (-10.0%), Alrasheed (-9.9%) and NGDC (-6.6%).

CORPORATE ACTIONS-

Saudi Industrial Development Company’s shareholders subscribed to 11.1 mn of the 16.5 mn shares offered under the firm’s rights issue, equivalent to 67.15% of the offering and valued at SAR 110.8 mn, it said in a disclosure to Tadawul. The remaining rump shares (5.4 mn) will be offered to institutional investors from 27 to 30 November. Allocation will be based on the highest offers at or above the offer price, with any unsubscribed shares then being transferred to the underwriter, Alinma Capital.

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