Outlook 2027

The IMF’s October 2026 outlook has US growth at 2.3% for 2026, ahead of the euro area (1.1%), UK (1.3%), Japan (0.7%) and Canada (1.1%). The US forecast was also revised up 0.3 points from October 2025, matching the “upside surprise” call. China and India still lead overall. Two of the three cyclical supports failed, though: energy prices rose and rates did not fall.

Advanced economy interest rates did reach their trough during the first half of 2026, although the process was accelerated by unforeseen renewed inflationary pressures, particularly from energy prices. Meanwhile, emerging market debt has continued to offer attractive yields and investment opportunities, although currency and inflation risks remain.

Fiscal sustainability and government borrowing requirements have remained important concerns throughout 2026, supporting our warning. Elevated debt burdens, persistent deficits and inflation uncertainty have contributed to volatility in government bond markets. Higher yields have also increased pressure on countries with weaker fiscal positions, particularly in Europe.

Geopolitical tensions have remained elevated throughout 2026, broadly validating our expectations. US-China strategic competition, changing trade relationships and increased government involvement in critical industries have continued to reshape the global economy. Conflict in the Middle East has also disrupted energy markets and heightened uncertainty

Drug pricing was right: TrumpRx launched in February 2026, and nine more drugmakers joined 17 larger ones in most-favoured-nation deals in August. There were also efforts to reduce regulatory burdens, although progress and measurable impact has been uneven. DOGE influence was incorrect, with it formally ending on 4 July 2026 with a disputed $215bn savings claim. 

Artificial intelligence has remained a major driver of investment and technological innovation throughout 2026, supporting our prediction. Significant capital expenditure on data centres, semiconductors and energy infrastructure has continued, while competition between the US and China remains intense.

European policymakers have continued pursuing structural reforms, deregulation and initiatives to strengthen industrial competitiveness, broadly supporting our expectations. Increased defence spending and efforts to deepen capital-market integration have also provided potential growth opportunities. However, economic performance has remained relatively subdued, with elevated energy costs, fiscal pressures and political uncertainty constraining progress.

MSCI Emerging Markets is up about 14% this year versus about 12% for MSCI World. The dollar has been broadly range-bound, rather than clearly weaker. Brazil’s outperformance backed the EM local-currency debt call.

Demand for liquidity solutions and diversification within private markets has continued to grow in 2026, supporting our expectations. Secondary-market transactions have increased, providing investors with additional opportunities to manage portfolios and access private assets. However, traditional private equity exits and distributions have remained constrained, while financing costs and valuation uncertainty continue to present challenges.

Improved investor sentiment, strategic consolidation and increased investment in technology and AI infrastructure have supported transaction volumes and capital raising. SpaceX raised a record $75bn in June, Q2 was the biggest US IPO quarter ever, and 2026 proceeds already exceed 2025.