Forecasts for the World’s Biggest Economies in 2026

Goldman Sachs Research expects “sturdy” global economic growth in 2026, with some of the world’s biggest economies getting a boost from higher fiscal spending, declining policy rates, and a reduced tariff impact.

Overall, Goldman Sachs Research forecasts global real (inflation-adjusted) GDP to increase 2.9% in 2026—higher than the consensus estimate of 2.7%. For many major economies, Goldman Sachs Research’s forecasts either match or exceed the consensus estimates of professional economists surveyed by Bloomberg.

Scroll down to see Goldman Sachs Research’s 2026 forecasts for some of the world’s biggest economies. All forecasts are on a year-over-year basis.

The US: Solid growth, low inflation, and a shaky labor market

Contribution to year-over-year core PCE inflation

Source: Department of Commerce, Goldman Sachs Research
 

Our economists are most optimistic (relative to consensus) on the US economy. They forecast that real GDP will expand 2.8% in 2026, versus the consensus estimate of 2.2%.

The key driver is that the drag from tariff increases should give way to a boost from business and personal tax cuts included in the One Big Beautiful Bill Act. Real wage gains and rising wealth should also help sustain consumer spending growth, says David Mericle, chief US economist, even as “new tax incentives, easier financial conditions, and reduced policy uncertainty should boost business investment.”

Goldman Sachs Research expects inflation in the US to keep coming down in 2026. The US economics team estimates that core personal consumption expenditures inflation will fall from 3% in 2025 to 2.2% in December 2026 as the impact of tariffs fades.

The euro area: A small improvement in growth

Contribution to Q4/Q4 euro area real GDP growth

Source: Haver Analytics, Goldman Sachs Research
 

Goldman Sachs Research forecasts the euro area economy to grow 1.3% this year—the same pace as last year and roughly in line with consensus estimates.

Higher fiscal spending in Germany is projected to boost GDP growth in the region’s largest economy by half a percentage point in 2026. Meanwhile, Spain is expected to be Europe’s best performing major economy, growing an estimated 2.4% this year, helped by its expanding professional services.

And while EU exports to the US have dropped sharply, demand in other export destinations has held up better. “This supports our view that the tariff-related growth drag has likely peaked and will fade into 2026,” explains Jari Stehn, chief Europe economist.

Consumer spending is expected to be resilient. Our economists forecast real household income growth of around 1.5% this year. When combined with a similar saving rate to 2025, this implies an average annual increase in consumption of 1.3%.

But these improvements are likely to be capped by structural headwinds. Export competition from China could hurt European trade, and the bloc still needs to address its high energy prices, regulatory burden, and demographic challenges, Stehn says.

Mainland China: Above-consensus growth driven by surging exports

Breakdown of price and volume contribution to goods exports

Source: Haver Analytics, Goldman Sachs Research
 

Our economists project 4.8% real GDP growth in China this year, above the consensus estimate of 4.6%.

Goldman Sachs Research’s most distinctive out-of-consensus view for China concerns the country’s current account surplus. Our economists expect the surplus to rise to 4.1% of GDP in 2026 from 3.5% in 2025, compared with the consensus estimate of a decline to 2.8%.

This expected resilience stems from an increase in exports to emerging markets, limited ability for other countries to impose trade barriers against China in the face of its critical minerals dominance, and the potential for greater growth in high-tech exports.

However, the government’s efforts to restructure the domestic economy are still in their early stages, says Hui Shan, chief China economist.

Japan: Steady growth led by domestic demand

Our economists expect semi-annual rate hikes until July 2027

Source: Bloomberg, BoJ, Goldman Sachs Research
 

In Japan, Goldman Sachs Research expects steady growth to continue, with 0.6% real GDP growth this year. Our economists anticipate firm domestic demand, with real private consumption growth of 0.9%. They also expect capital expenditure to maintain its upward trend amid continued high levels of corporate profits.

“We do not see any major risks to the domestic economy, as the solid domestic demand stems from the structural shift to a labor shortage economy with continued high wage growth,” says Akira Otani, senior Japan research economic advisor.

With underlying inflation expected to continue rising moderately, monetary policy is reaching a crucial stage. Our economists expect the Bank of Japan to accelerate interest rate hikes to a semi-annual pace from the once-a-year pace of 2025. They forecast that the central bank will raise the policy rate to 1% this year—most likely in July—and that it will continue to hike roughly every six months until it reaches 1.5%.

The UK: “Another mixed year”

UK employment growth (annualized)

Source: Haver Analytics, Goldman Sachs Research
 

In the UK, our economists anticipate a weakening labor market on the one hand and a boost from cooling inflation and rate cuts on the other. Overall, Goldman Sachs Research forecasts the UK economy will grow by 1.5% over the next four quarters, up from 1% over the last year.

Goldman Sachs Research expects the unemployment rate to rise until March before stabilizing for the remainder of 2026 as economic growth picks up.

Our economists project headline inflation will decelerate to 2.2% in the second quarter of 2026, down from an average of 3.4% in 2025.

The combination of a weakening labor market and fading inflation should allow the central bank to reduce interest rates. Goldman Sachs Research anticipates three further 25 basis-point cuts this year, bringing the Bank of England’s key policy rate to 3%.