We are not far into 2026, and the global economy has already been thrown around like a dinghy on the high seas. In the face of geopolitical turmoil and the ongoing impact of AI, what can we expect for the rest of the year?
ACCA’s latest Global Economic Outlook seeks to bring some calm and thoughtful analysis to the chaos, setting out the prospects for the global economy and key countries as well as some of the major risks. The headline conclusion is that the global economy ‘looks set to expand at a reasonable, if not particularly exciting pace’ of just over 3% in 2026 – but against the backdrop of ‘a wide array of risks’.
The message is that uncertainty does not necessarily translate into economic decline. The report makes the point that 2025 was ‘a momentous year’ for international trade and the global economy, thanks largely to the US president’s tariffs.
India is expected once again to be the world’s fastest-growing economy
Growth stays resilient
The average effective US tariff rate currently stands at around 17%, the highest since the 1930s and up from 2.4% in 2024 – and yet, despite the disruption, global growth proved more resilient than expected in 2025. This is reflected in the International Monetary Fund’s (IMF) forecasts for global growth during the year.
The report predicts that the US will once again be the strongest performer of the major advanced economies in 2026, helped by supportive financial conditions and the AI boom, while growth is likely to be more sluggish in the UK and eurozone. Growth in China is expected to moderate in 2026, while remaining faster than the global average. India, meanwhile, has shown resilience against US tariffs and is expected once again to be the world’s fastest-growing economy.
AI implications
The report notes that ‘robust investment in AI-related equipment and data centres’ has supported US growth and boosted exports from Asia Pacific. But concerns about an AI bubble and the exact potential of AI to deliver growth and efficiency cast a shadow.
Concerns about the exact potential of AI to deliver growth cast a shadow
The report acknowledges that the global AI boom contributed significantly to the resilience of the global economy in 2025 and adds that ‘if evidence begins to build that AI investment is boosting productivity at firms, fears about an AI bubble could generally ease’. But, if not, the risks of a large correction in equity markets could increase.
The report includes an interview with Kenneth Rogoff, the former chief economist of the IMF, who argues that there is ‘huge uncertainty in the global economy, which is not reflected in financial markets to the extent it should be’. Rogoff is also cautious about the impact of AI: ‘In my opinion, job losses are going to be much bigger than the growth gains, although that certainly could point to upside for the stock market. In terms of the future of AI, there’s every possibility that we see a backlash bigger than with globalisation.’
Other potential headwinds are seen in the form of softer labour markets in a number of countries (and the potential impact on consumer spending), and the unwinding of the previous frontloading of exports to the US ahead of tariff increases.
The fragile nature of global growth is reflected in the confidence index of accountants worldwide.
Bond effect
The report also discusses in detail the bond markets in advanced economies, noting that another rise in government bond yields in 2026 in the US and elsewhere ‘would likely weigh on global financial markets, increase debt-servicing costs and hurt economic growth’.
The unpredictability of the US administration looms large
Developments in Japan also need to be watched closely, it adds; higher interest rates there could push up government borrowing costs in other markets ‘and there is a risk that this process could happen in quite an abrupt manner’.
The overall picture is one of cautious optimism that the global economy will continue to be resilient enough to withstand most shocks, although the unpredictability of the US administration looms large.
‘We will continue to monitor the ripple effects from the changes in US trade policy in 2025,’ says the report, ‘while remaining alert to a further deterioration in global trade relations.’
