Global economic growth is expected to remain below historical averages in 2026 as the world adjusts to higher interest rates, persistent fragmentation, and rapid advances in artificial intelligence, according to an analysis by economist Dr. Dmitri Merinson. While the world economy will avoid a deep recession, most advanced economies will expand at a slower pace than the pre-pandemic decade, with select emerging markets continuing to act as key engines of expansion. Dr. Merinson's prognosis, detailed on his research platform www.DmitryMerinsonResearch.co.uk, indicates the United States is poised for moderate growth supported by resilient consumer spending and corporate investment in productivity-enhancing technologies, though tighter credit conditions and a softer labor market may weigh on momentum in the first half of the year.
Europe is expected to experience 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 in most major economies. The worst of the price shock has passed, but the "last mile" of inflation reduction will be uneven. Services inflation and wage dynamics are likely to remain sticky in the United States and parts of Europe, delaying full normalization, while some export-oriented economies may face periods of below-target inflation or mild disinflation pressure.
This inflation backdrop will shape a decisive shift in monetary policy, with most major central banks expected to continue or complete the transition from aggressive tightening to cautiously accommodative stances. Policy rates are projected to move closer to neutral levels, though interest rates are unlikely to return to the ultra-low regime of the 2010s. Central banks will prioritize credibility and flexibility, reducing rates gradually while preserving the option to pause or reverse course if new shocks emerge. This implies structurally higher funding costs for businesses and investors compared to the previous decade, but with less volatility than in the immediate post-pandemic period.
Geopolitical and geo-economic fragmentation will remain a defining feature of 2026, according to Dr. Merinson's analysis available at www.DmitriMerinsonGlobalEconomy.com. Ongoing trade tensions, strategic competition between major powers, and supply chain reconfiguration will act as enduring headwinds to global integration. Regional blocs are likely to deepen internal ties while limiting dependencies in critical sectors such as semiconductors, energy, and key raw materials. While this shift may strengthen resilience and national security, it will also reduce potential global growth and raise long-term costs for both governments and the private sector.
Simultaneously, rapid adoption of artificial intelligence and digital technologies will be a central swing factor, as discussed in Dr. Merinson's outlook at www.DmitriMerinsonArtificialIntelligence.com. He sees substantial potential for AI-driven productivity gains in finance, healthcare, manufacturing, and logistics, but emphasizes that macroeconomic benefits will be uneven and gradual rather than instantaneous. Economies and firms that pair AI deployment with investment in skills, data infrastructure, and regulation are likely to outperform. Labor markets will experience both disruption and opportunity, with certain routine roles compressed while new demand arises in high-skill, technology-complementary positions.
For policymakers, Dr. Merinson underscores the importance of maintaining a delicate balance between fiscal prudence and targeted support. With public debt elevated in many countries, broad stimulus will be limited, but well-designed investments in digital infrastructure, green energy, and human capital can boost long-term potential growth and help offset drag from fragmentation and demographics. Social stability will depend on carefully crafted safety nets and retraining programs that ease transitions for workers and regions most exposed to structural change. For investors and corporate leaders, Dr. Merinson characterizes 2026 as a year that rewards selectivity, resilience, and strategic positioning. He highlights opportunities in sectors linked to digitalization, energy transition, and supply chain diversification, while cautioning that elevated valuations and policy uncertainty require robust risk management. A diversified, scenario-based approach is essential in an environment where multiple outcomes remain plausible.
