This issue was completed on February 27, 2026 and does not take into account the repercussions of the military attacks that have since occurred in the Middle East. Emerging countries with strategic resources, such as critical metals and semiconductor production capacities, have become key players in the rise of artificial intelligence (AI). Those that are well positioned in AI supply chains have both a growth engine and a major geopolitical advantage. Asia's industrialised economies, which account for over 85% of the world's exports of electronic chips, are best placed to benefit from the increasing demand for AI. However, this advantage also exposes them to a potential correction in the technology boom
The development of artificial intelligence (AI) depends largely on the availability of abundant and reliable electricity. The sector currently accounts for 4.5% of electricity demand in the United States, 2% in Europe and around 1% in Asia (including China), where the vast majority of data centres are located. In contrast, this figure is less than 0.5% in the rest of the world, but is set to increase in the coming years. To attract investment in the AI sector, emerging countries must therefore consider significantly increasing their electricity generation capacity and establishing networks capable of continuously powering data centres. Massive investments in infrastructure, along with the use of flexible energy sources (gas, renewables), are assets for attracting AI projects
Central Europe: Economic growth accelerated slightly to 2.3% for 2025 as a whole - Asia: In 2025, economic growth weathered the rise in US tariffs much better than expected - North Africa/Middle East: The economies of saw a rebound in growth in 2025 - Sub-Saharan Africa: The economic outlook for the region has been positively adjusted in recent months - Latin American: In 2025 these countries experienced slower growth
Key indicators for emerging countries: Real GDP, inflation, credit, public debt.
China's economic growth model is based on imbalances, characterised by sluggish domestic demand, excess production capacities, strong exports and the pursuit of self-sufficiency, which have implications for its trading partners. While the IMF has recently reiterated the urgent need to boost private consumption, Beijing continues to give the priority to industrial policy and maintains moderately accommodative fiscal and monetary policies. It places cutting-edge sectors, innovation, AI and technological autonomy at the heart of its development strategy. This strategy aims to foster productivity gains and economic growth, while also consolidating China's dominance in global industry and its commitment to "national security".
India’s economic growth is projected to be +7.6% for FY 2025/26, ranking among the highest in Asia. Monetary easing and VAT cuts have bolstered domestic demand. The medium-term outlook remains favourable. The reduction in US tariffs and the gradual rollout of new free trade agreements (FTAs)—including with the US, EU, UK and EFTA—should bolster exports. After decades of protectionism, India is opening up its economy to attract FDI, develop industry, and create high-quality jobs. The government acknowledges the risks that AI poses to employment in the IT services sector.
Malaysia’s economic growth continues to be robust and is projected to remain resilient over the next two years, underpinned by vigorous domestic demand and sustained global consumption of electronic goods. Unlike other ASEAN economies, however, Malaysia has derived little benefit from the decline in Chinese exports to the US market. Moreover, its imports of Chinese products have risen sharply, putting pressure on the manufacturing sector. Like its regional peers, Malaysia is actively expanding its trade and financial partnerships to diversify its exports and attract investment—critical steps to ascending the value chain in artificial intelligence (AI) components.
All eyes are on the general elections on 12 April which will encapsulate the key issues facing Hungary. Regardless of the outcome of the election, Hungary’s economic growth is expected to recover in 2026 and 2027, driven by more favourable export and consumption prospects. One cloud on the horizon, however, is the continued uncertainty around the trajectory of investment, as it hinges on European funds being released. Inflation is expected to remain within its target range in the short term, paving the way for a cycle of moderate monetary easing. Artificial intelligence is a promising sector and will play an important role in the coming years.
Poland's economy is impressively dynamic. In 2025, the country posted the highest growth rate in Central Europe and one of the highest in the European Union. This growth pattern should, yet again, be observed in 2026. Inflation is projected to remain within its target range in 2026 and 2027. However, the cycle of monetary easing is coming to an end. Public finances have deteriorated, but the Polish government can still easily secure financing on the bond market, and sovereign risk remains limited. The artificial intelligence sector, while still in its infancy, is set to become a key driver of growth.
The Turkish economy has experienced a moderate deceleration despite a flat labour market since 2024 and a reduction in exports in the second half of 2025. Concerns linked to political tensions in March 2025 have dissipated. Consumption is slowing but remains buoyant thanks to renewed disinflation and the use of credit. Investment has recovered after a slump in 2024. Growth is expected to strengthen slightly in 2026, in contrast to the previously expected slowdown scenario. Consumption is expected to moderate further, influenced by tighter controls on credit card use. However, monetary policy is likely to remain accommodative, and fiscal policy will also adopt a more supportive stance. The overvaluation of the lira continues to be the main risk to growth
The Argentine economy has avoided recession due to strong exports. Fiscal policy is restrictive and will remain so, while inflation has picked up again in recent months. Growth is expected to slow in 2026 before rebounding in 2027. Empowered by his party's gains in the October 2025 mid-term elections, President Milei aims to push through his structural reforms swiftly. With backing from the IMF, the US Treasury and major international banks, foreign exchange reserves have been replenished, and the risk premium has fallen significantly. However, reserves remain low in view of the dollar-denominated debt servicing obligations for the next two years. Although the AI sector has yet to make a significant impact on growth, it is contributing to the development of the mining industry
The Brazilian economy is navigating between two currents: on the one hand, signs of a cyclical slowdown are mounting under the effects of monetary tightening; on the other hand, rebalancing mechanisms are emerging: disinflation is ongoing, interest rates cuts are in sight, the labour market is adjusting gradually to a more sustainable equilibrium, and economic growth is moving closer to its long-term potential. The current account deficit is resisting rebalancing, though it stays comfortably covered by steady inflows of foreign capital. The country's positioning in AI value chains reflects its comparative advantages: abundant natural and energy resources and a vibrant startup ecosystem
Chile’s economic growth will slow very slightly in 2026 but will remain close to its potential, while inflation will fluctuate around the 3% target. The mining sector continues to be an important driver of growth: high copper and lithium prices are bolstering exports and investment projects. The pace of fiscal consolidation and the investment outlook will largely depend on the new government's ability to implement the economic measures announced during the presidential campaign. Despite the proliferation of initiatives aimed at developing the AI sector, its contribution to growth remains low. Mining resources are an asset and projects are multiplying, but environmental and social constraints will have to be addressed.
Strong exports helped the Mexican economy to avoid recession in 2025, despite geopolitical tensions. Sluggish investment is a structural weakness in the country, and the outlook is not favourable. However, driven by household consumption, activity is expected to rebound in 2026, and Mexican growth could reach its potential. Nevertheless, the short- and medium-term outlook hinges largely on the outcome of the USMCA negotiations. The same is true in the AI sector, as the sharp increase in exports of AI-related products to the United States masks a structural weakness in the local industry, which is still primarily a low value-added assembly platform. Here again, the outlook hinges on future USMCA negotiations, which could introduce new regulatory requirements.
Economic growth remains strong, with a positive short-term outlook fuelled by the rebound in oil production and the performance of the private sector. However, this growth coincides with widening twin deficits. The investment requirements of the Vision 2030 transformation initiative are straining public finances and external accounts, both of which are currently in deficit, while also affecting the banking sector. The authorities are adjusting their diversification strategy, but the anticipated drop in oil prices is expected to continue to exert pressure on public finances in 2026. The country still has ample financial leeway, and its ambitions remain intact. In fact, priority is now being accorded to developing strategic sectors, particularly artificial intelligence.
The South African economy has shown resilience in the face of the shocks that marked 2025. Despite severe protectionist measures taken by the United States, the deterioration in external accounts has been moderate thus far, thanks to a strong performance in raw-material exports. From a low point in 2024, economic growth rebounded in 2025 and is expected to accelerate gradually over the next two years. Therefore, the outlook is encouraging, even if potential growth remains too weak to improve GDP per capita. Moreover, with high public debt and many reforms still to be implemented, in order to harness the potential of AI in particular, vulnerabilities persist and caution is warranted.
After a year marked by global economic resilience and ending on a note of optimism, 2026 looks promising and could be a year of solid economic performance. In our baseline scenario, we expect most of the supportive factors at work in 2025 to continue to play a role in 2026 (favorable economic policy, AI, low oil prices), and even to gain momentum in the case of the German stimulus plan and European rearmament efforts. Growth in the Eurozone would thus stand out as stronger (1.6% in 2026 and 2027 after 1.5% in 2025), while US growth would stabilize at a rate close to but below 2%. Fiscal policy would, strangely enough, be both a factor supporting and hindering growth
Public finances in advanced economies are facing a combination of pressures. The structural rise in interest rates is already complicating the situation, but its effects are not yet being fully felt. When they do (at the end of the decade), most countries will need to generate primary surpluses in order to stabilise their debt ratios. At the same time, governments must fund age-related spending, defence and climate change mitigation. In this climate, higher growth would help to stabilise public debt-to-GDP ratios, and vice versa.
Growth in the United States is expected to come close to its potential pace in 2026. This resilience would mask “K-shaped growth”, supported by AI-optimism related investment and consumption by the wealthiest. Investment in other areas of the economy is not as dynamic, while most Americans face persistent inflation and a deteriorating labour market. At the end of Q1 2026, the Fed is expected to end its cycle of monetary easing, due to an emphasis on the employment component of its dual mandate. The fiscal impulse is expected to remain slightly negative in 2026 due to tariffs, with their scope still a key issue.
Growth in the Eurozone is expected to strengthen in 2026 (1.6%) primarily driven by investment and a resurgence in activity in Germany. Our forecasts indicate that inflation is likely to remain below the 2% target. However, the anticipated recovery in GDP growth may prompt the ECB to keep its rates unchanged until 2027 before raising them. The fiscal impulse is expected to remain largely neutral, as fiscal consolidation in France and Italy offsets the increase in the German deficit. Interest rates on new loans to households and businesses are projected to remain stable in 2026, with new loans continuing to decelerate for both households and businesses. However, sovereign rates are expected to rise moderately.
The German economy is undergoing a strategic transformation, with increased public spending poised to significantly change its economic model. This transformation has the potential to boost business investment and household spending, while also reducing the country's reliance on exports. The stability of GDP in Q3 2025 underscores this duality: the rise in public spending and private investment is offsetting the ongoing decline in exports. Following a growth rate of 0.3% in 2025, Germany's economic expansion is projected to gain considerable momentum in 2026 (1.4%) and 2027 (1.5%), with this growth gradually extending to the private sector. The rise in public debt is expected to remain manageable and temporary
French growth has been rebounding since Q2 2025, driven primarily by aeronautics production, but also by business investment in a context of decreasing interest rates. These two factors are coming along with two structural drivers: growth in services and public consumption. In 2026, these momentums are expected to continue. Additionally, exports should benefit from the rebound in German growth. Inflation is expected to remain low and household consumption to strengthen moderately, against a backdrop of continued high political uncertainty. French GDP growth is expected to return to its 2024 level (1.1%) in 2026, after a soft patch in 2025 (0.8%).
The Italian economy is showing some resilience: GDP experienced a modest rebound in Q3 2025, and moderate inflation is helping to maintain household purchasing power. We forecast growth to be around 1% over the next two years (1% in 2026 and 0.9% in 2027). Market confidence has been bolstered, as evidenced by improved ratings, due to political stability, fiscal consolidation, and a growing share of public debt held abroad. Exports are benefiting from a robust pharmaceutical sector and intra-EU sales, while trade with the United States remains positive. Despite an historically strong labour market, productivity remains low due to weak intangible investment, limited digitalisation and significant fragmentation within the business sector.
Spanish growth should continue to outpace Eurozone growth. It is underpinned by a dynamic labour market, which is generating gains in purchasing power and bolstering consumption. Investment, meanwhile, is benefiting from lower interest rates and European funding. This strong GDP growth will enable the country to generate primary surpluses and continue to reduce its public debt ratio. However, Spanish activity should come up against the constraint of full employment at the end of the decade, in the absence of significant productivity gains.
Growth is expected to reach 1.1% in 2026, down from 1.4% in 2025, the latter benefiting from an exceptionally strong first quarter. However, GDP growth is likely to be unevenly distributed. On the one hand, the service sector is likely to gain from advancements in AI. On the other hand, households will suffer from the deterioration of the labour market, while the industrial sector will face penalties from reduced competitiveness and increased competition from China. Disinflation is expected to progress gradually, which will restrict the BoE's ability to ease monetary policy. The policy mix will be more accommodative, with part of the fiscal consolidation effort postponed until the end of the decade
EcoPerspectives is the quarterly review of advanced economies (member countries of the Organisation for Economic Co-operation and Development) and China.
It provides an outline of several advanced economies using indicators for the past quarter and it looks ahead in order to better understand and anticipate the main economic problems of the countries in question.
For EcoPerspectives, economists from the advanced economies team regularly monitor the key economic indicators of selected countries. In particular, our experts use the quarterly forecasts provided by BNP Paribas (for growth, inflation, exchange rates, interest rates and oil prices). Each economist analyses the economic situation of one or more countries, based on the available indicators, in order to see how they change, including the industrial production index, quarterly gross domestic product (GDP) and inflation forecasts, the consumer price index (CPI) and the producer price index (PPI), and employment and unemployment figures. How various stakeholders’ views evolve is also studied and analysed closely (e.g. household confidence and business climate). The author comments on the main factors that influence and determine the economic activity of the country concerned and the economic outlook for the coming quarter.
