Economic and Market Outlook 2026

Mercer's annual Economic and Market Outlook for 2026 characterises the coming year as likely to be as consequential as 2025. The report argues that the Trump administration has placed the US on a different economic path from the one it followed since 1945, departing from the prevailing post-war economic consensus. Mercer notes that the long-term success of this policy shift will only be fully judged decades from now. The report also identifies the growth of artificial intelligence as a potential start of a new economic era, while acknowledging that its consequences remain unclear. Mercer's assessment is that AI is likely to matter materially for economic and financial market outcomes.

Looking back at 2025, Mercer identifies two defining developments: the Trump administration's trade agenda and the ongoing AI boom. The trade agenda, which generated considerable alarm when introduced, has in Mercer's view had only a modest impact on global growth. Mercer expects this influence to fade further in 2026, while AI is expected to continue to loom large in economic and market developments.

On growth, Mercer expects global expansion to remain steady in 2026. The US economy is forecast to be the primary driver, supported by robust consumer spending, fiscal stimulus under the OBBBA, and a surge in AI-related investment approaching USD 500 billion. Easing monetary policy and more stable trade conditions are expected to sustain momentum. In Europe, Mercer cites German infrastructure spending and lower interest rates as supportive factors. The UK is expected to remain subdued but fiscally sound, and Japan's growth is projected to remain modestly above trend, driven by wage gains and investment in automation. China's expansion is expected to hold near current levels, as weak domestic demand offsets gains in high-tech manufacturing and AI localisation.