As 2026 begins, the global economy is displaying an unexpected degree of resilience. United States tariffs, political unpredictability and the structural slowdown concerns that dominated 2025 have not derailed growth to the extent many anticipated.
Instead, an extraordinary boom in artificial intelligence investment, particularly in the United States, is cushioning the impact of trade frictions and reshaping the global macro narrative.
Across analysis from Fitch Ratings, S&P Global Ratings and global asset manager T. Rowe Price, a common theme emerges: data-centre construction, semiconductor capacity build-out, and AI software and hardware investment are no longer abstract “future productivity” bets.
They have become the single most powerful driver of near-term output, corporate spending and financial market performance.
Yet, beneath the surface of this uplift, vulnerabilities remain. Growth is narrow, tariff policy is unpredictable, labour markets are fragile, and valuations, especially in AI-linked sectors, are stretched.
The question for 2026 is whether the AI boom represents the early stages of a structural transformation or merely the late stages of a speculative cycle masking deeper fragilities.
Fitch: World GDP Edges Higher as IT Investment Offsets Tariffs
In its December Global Economic Outlook, Fitch Ratings reported a notably stronger global picture than earlier in 2025. The agency revised world GDP growth to 2.5% in 2025 and 2.4% in 2026, from 2.9% in 2024, citing the remarkable surge in U.S. IT capex.
According to Fitch, IT investment accounted for nearly 90% of U.S. GDP growth in the first half of 2025, a concentration that would be extraordinary in any cycle. This surge extends far beyond servers and chips; the rise in imports of IT equipment and the wealth effects from booming equity markets have lifted consumption by an estimated 0.4 percentage points.
Fitch Chief Economist Brian Coulton summed up the dynamic succinctly: “The robots have come to the rescue.”
The U.S. effective tariff rate (ETR) has risen from 2.4% in 2024 to 13.6% in 2025, the highest since 1941.
Yet the economic drag has been smaller than feared thanks to two offsets: the IT investment boom and the equity market rally.
Fitch estimates that corporate indebtedness has not yet surged in parallel, limiting immediate systemic risk.
The agency upgraded U.S. growth to 1.8% for 2025 and 1.9% for 2026, and lifted eurozone and China forecasts modestly. However, concerns around global debt persist.
Combined U.S. and China government borrowing is expected to reach US$4 trillion, or 4% of global GDP, in both 2025 and 2026 - a scale Fitch describes as a major contributor to demand resilience.
Looking ahead, Fitch expects major central banks to converge towards “neutral” interest rates by mid-2026.
The Federal Reserve is forecast to deliver three rate cuts by June 2026 as tariff shocks stabilise and unemployment edges up.
S&P Global Ratings: AI Tailwinds and Lower Oil Prices Boosting Growth
S&P Global’s Q1 2026 Global Economic Outlook similarly highlights a strong upside turn in macro data. Two developments underpin the new optimism: tariffs have landed lower than expected, and AI-related investment is accelerating faster than anticipated.
The U.S.-China one-year détente reduced tariff uncertainty, and U.S. import tariff passthrough to consumer prices has been slower than expected, with firms absorbing higher costs through margins rather than raising prices fully.
This has softened what many feared would be a powerful inflationary impulse.
The second pillar of the improved outlook is a suite of positive tailwinds:
- The U.S.-led AI investment boom
- S&P estimates that over 80% of U.S. domestic demand growth in the first half of 2025 stemmed from data-centre construction and AI-related capital spending. Importantly, this spending is hardware- and software-heavy, not just infrastructure: racks, servers, chips, LLM-related software, power systems and cooling technologies are driving imports, capex and tech exports.
- Accommodative financial conditions
- Despite policy rates remaining above neutral in many markets, bond yields are low and spreads are tight, boosting credit availability. High equity and real-estate prices are amplifying wealth effects.
- Lower oil prices
- A combination of strong OPEC+ supply and softer global demand (largely due to slower Chinese restocking) has pushed oil prices lower, effectively acting as a global tax cut and disproportionately benefiting lower-income households.
S&P notes that macro data has settled into a “moderate growth pattern”. Q3 GDP across most major economies exceeded expectations. PMIs remain in expansion territory across the U.S., eurozone, Japan and India.
Inflation is declining broadly, though the U.S. remains an outlier, with headline inflation expected to peak at 3.25% in early 2026, driven by tariff effects.
Central banks continue cautious cutting cycles. The Fed and Bank of Canada lowered rates in late 2025; the ECB and Bank of England remain on hold but are likely done tightening.
S&P’s updated forecasts place global GDP growth near 3.2% across the forecast horizon, with upgrades across most regions:
- United States: ~2% in 2025 and 2026.
- Eurozone: aided by Germany’s fiscal easing (0.5% of GDP in 2026).
- China: raised to 4.4% in 2026 due to tariff relief.
- India: continuing as the world’s fastest-growing major economy (6.5–7%).
- Asia-Pacific: uplift to 4.2% for 2026.
- Emerging markets: modest slowdowns but strong AI-related export demand.
Yet S&P issues warnings: employment bases are narrowing sharply, bond yields could spike given high debt loads, and equities and property markets may correct if valuations revert to historical ranges.
The AI boom’s sustainability, both in terms of macro productivity and corporate earnings, remains unproven.
T. Rowe Price: AI Moves from Hype to Hard Infrastructure
T. Rowe Price’s 2026 Global Market Outlook echoes the assessments of the ratings agencies: AI is shifting from promise to profitability.
Eric Veiel, the firm’s CIO, writes that AI “is powering measurable change across the global economy”, supported by unprecedented infrastructure build-out in data centres, semiconductors and energy systems.
For the U.S., where fiscal incentives and legislation continue to amplify private-sector investment, AI is emerging as a productivity driver at a time when other regions, particularly Europe, are hamstrung by tariffs and weak manufacturing demand.
However, T. Rowe Price warns of the same valuation risks highlighted by Fitch and S&P. The speed and scale of capital deployment in AI-linked assets have raised concerns about speculative excess.
Investors face a difficult balancing act between capturing structural growth and avoiding the pitfalls of exuberant pricing.
The firm’s macro stance is cautiously optimistic: AI investment should support productivity through 2026 and beyond, but macro weakness may become more visible as the AI boom ceases to mask softness in consumption, manufacturing and global trade.
Regional Picture: A World of Divergent Tailwinds
United States: Strong Growth but Narrow Foundations
U.S. GDP is projected to grow around 2% in both 2025 and 2026, driven overwhelmingly by AI-related investment.
But labour markets are deceptively fragile: healthcare is the only sector with consistent job growth, while employment in government, technology and manufacturing has weakened. The narrow base increases vulnerability to shocks.
Eurozone: Germany’s Fiscal Reawakening
Fiscal stimulus in Germany, combined with tech-export spillovers from the U.S. AI boom, is supporting moderate recovery.
Growth is forecast at 1.4% in 2025 and 1.3% in 2026, but further monetary easing looks unlikely.
China: Stabilisation with Lower Tariffs
China’s fixed-asset investment has contracted for much of 2025, but tariff relief has improved the 2026 outlook.
Growth is now projected at 4.4%. Deflation remains entrenched, limiting domestic demand momentum.
Asia-Pacific and Emerging Markets: Benefiting from Tech Export Strength
Asian emerging markets tied to semiconductor and hardware exports are outperforming.
Lower oil prices support consumption in lower-income countries, but wider EM growth will remain sensitive to U.S. rates and China’s recovery profile.
Risks: High Valuations, Narrow Growth, and Fed Uncertainty
Across all three institutional analyses, risks converge around several themes: Labour markets are precariously narrow, especially in the U.S., where layoffs could easily trigger a turning point.
Bond yields and credit spreads could rise sharply, exposing fragile balance sheets.
Equity and property valuations are stretched, particularly in AI-related sectors.
AI-investment risks diverge between productivity and earnings:
Productivity gains may take years.
Earnings disappointments could trigger sudden repricing.
Geopolitical unpredictability remains high, despite temporary tariff détente.
These risks are not mutually exclusive, and several could materialise simultaneously.
Conclusion: A Strong 2026 Outlook with Structural Uncertainty
The outlook for 2026 is stronger and more stable than many would have expected only months ago. AI investment, accommodative financial conditions and fiscal support have created a powerful cushion against tariff shocks and global headwinds.
Yet the underlying picture is far from secure. Growth is narrow, employment bases are thinning, public debt is rising, and markets appear priced for near-perfect earnings outcomes from AI hyperscalers.
The U.S.–China détente is temporary, and geopolitical tensions remain unresolved.
In short, 2026 may be a decent macro year - but it rests on foundations that will continue to be tested.
As the world enters the next phase of the AI era, investors and policymakers must navigate both the transformative potential and the accumulating risks of this unprecedented economic cycle.
