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Economy

Crash? Nope, Says Goldman Sachs

• By  Textile Excellence
• January 02, 2026

The global economy is set for steady growth in 2026, with global GDP forecast to expand by 2.8%, above the consensus estimate of 2.5%, according to Goldman Sachs Research. The outlook reflects resilience in major economies, easing inflation pressures and a gradual shift toward lower interest rates, even as job growth remains subdued. In its report Macro Outlook 2026: Sturdy Growth, Stagnant Jobs, Stable Prices, Goldman Sachs expects most major economies to meet or exceed market expectations.

US GDP growth is projected to accelerate to 2.6% in 2026. The momentum is driven by tax cuts, easier financial conditions and a reduced drag from tariffs. Consumers are expected to receive about US$100 billion in additional tax refunds in the first half of the year, equivalent to 0.4% of annual disposable income. Growth is likely to be front-loaded, with particularly strong expansion in the first half of 2026, supported by a rebound from the recent government shutdown.

China’s outlook is more mixed. GDP is expected to grow 4.8%, led by a robust manufacturing sector and strong exports. China’s ability to produce higher-quality goods at lower costs remains unmatched, helping it withstands high tariffs. However, domestic demand continues to lag. The ongoing property downturn, despite much of the damage already done, is expected to shave about 1.5 percentage points off GDP growth next year. This imbalance is pushing China’s current account surplus higher, potentially nearing 1% of global GDP over the next few years, a development that could weigh on competing economies, particularly Germany.

India is projected to be a standout performer, with real GDP growth forecast to hit 6.7% in 2026, outpacing other major global economies. This robust expansion is primarily driven by resilient domestic demand and a sustained government push on public infrastructure—spanning physical connectivity and digital networks—which effectively buffers the economy against global trade volatilities. With inflation pressures expected to ease, the economic environment remains conducive to investment, cementing India’s status as a critical engine of global growth.

The euro area economy is forecast to grow a “decent” 1.3% in 2026. While structural challenges such as demographic decline, regulation and high energy costs persist, fiscal stimulus in Germany and strong consumer spending in Spain are expected to support growth. Spain, in particular, continues to benefit from diversification into higher value-added services.

Despite rising GDP, labour markets remain weak. Job growth across developed economies is well below pre-pandemic levels, partly reflecting slower immigration and labour force growth. The productivity impact of artificial intelligence has so far been limited, with major gains still a few years away.

On inflation, Goldman Sachs expects core inflation in developed markets to ease toward central bank targets in 2026. Slowing wage growth is a key factor. As inflation moderates, policy rates are expected to move lower. The US Federal Reserve is forecast to cut rates by 50 basis points to 3–3.25%, while the UK and Norway are also expected to ease. The European Central Bank, however, is likely to hold rates steady as inflation falls.

US GDP growth is projected to accelerate to 2.6% in 2026. The momentum is driven by tax cuts, easier financial conditions and a reduced drag from tariffs. Consumers are expected to receive about US$100 billion in additional tax refunds in the first half of the year, equivalent to 0.4% of annual disposable income. Growth is likely to be front-loaded, with particularly strong expansion in the first half of 2026, supported by a rebound from the recent government shutdown.