Charlotte Mueller, European Chief Economist at Swiss Re, said the firm still expects GDP growth to hold up reasonably well in 2026, despite a fragmented global order of competing spheres of influence that shortens the path to adverse tail risk scenarios.
Mueller said Swiss Re starts the year with geopolitical risk back in focus, with 2026 poised to be just as volatile on the geopolitical front as last year.
Despite this, Swiss Re forecasts solid global real GDP growth, with economies assumed to expand at similar annual rates to last year. The firm also sees upside risk to its forecasts in several key markets.
The US economy enters 2026 with strong carry-over momentum, driven by the government reopening after its shutdown, large fiscal stimulus lifting incomes in the second quarter of 2026, and stronger labour productivity. US hiring declined in late Q4, partly due to delayed public sector layoffs, but a fall in the unemployment rate implies stable underlying economic conditions.
In Europe, Swiss Re expects Germany’s EUR 1 trillion fiscal stimulus to support euro area growth this year, offsetting fiscal consolidation efforts by peers.
In China, despite strength in PMI data, Swiss Re expects growth to moderate due to soft household consumption and fading fiscal support.
Mueller continued: “On inflation, we continue to expect inflation persistence in the U.S. amid economic resilience, but also the ongoing tariff pass through to prices. In contrast, in Europe and China, we continue to expect muted inflation pressure, and we even flag further downside risks to our near term euro area CPI inflation outlook.
“Finally, on central banks, we will see the US Fed continuing to cut policy interest rates this year, albeit to levels that are not as low as in the euro area, where the European Central Bank is set to keep the deposit rate steady at 2% throughout this year. In contrast, in Japan we will continue to move in the other direction, raising interest rates, as the APAC region sees widening policy divergence.”
