The updated economic scenario and forecasts of the Economic research
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2026 could prove to be just as turbulent and resilient as 2025 in economic terms. The use of the term “turbulent” is justified considering the geopolitical developments and tensions that have already marked the beginning of this year, and which constitute an additional source of uncertainty (the immediate short-term economic impact is expected to be minimal, with low oil prices offsetting the negative effect of increased uncertainty). The second term reflects a crucial aspect of our baseline scenario. However, it remains to be seen whether the global economy, and advanced economies in particular (the focus of this editorial), will manage to navigate the challenges ahead as they did in 2025
Most years fade into the background as soon as a new one starts. Not 2025: a year of epochal shifts, in which the macroeconomy was the dog that did not bark. What to expect in 2026? The shocks of 2025 will not be undone, but neither will they be repeated. Instead, their effects will work their way through the system, in ways that are unlikely to be linear and smooth. In the baseline scenario, the macroeconomy will remain a dog that does not bark, either out of alarm or joy. However, there are a few potential path changers to look out for. Chances are, then, that 2026 will not feel any smoother on a day-to-day basis than its predecessor. However, that will not mean good outcomes cannot be reached for those who keep their heads.
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.
A series of six charts showing key economic indicators (GDP, inflation, unemployment, current account balance, budget balance, public debt ratio) and comparing the situations of the major advanced economies.
Contributions of the various components of demand to quarterly growth (quarter-on-quarter, non-annualized).
Economic and financial forecasts for major economies as of December 15, 2025.
Countries will not be able to limit global warming to +1.5°C compared to pre-industrial levels, as was the ambition of the Paris Agreement ten years ago. However, it would be wrong to conclude that it was a failure. Paris was the catalyst in accelerating for the race to decarbonisation, not only in the European Union, but also in China, which is now on track to reduce its greenhouse gas emissions. Despite the climate scepticism of its president, Donald Trump, the United States continues to green its electricity production. The scientific consensus is that we must now expand and intensify our efforts, which will come at a cost, but much lower than the cost of the status quo.
Twice a year, BNP Paribas Economic Research invites you to take stock of the global economic situation at a dedicated conference. For the December 2025 edition, the team has chosen to review the past year and present its outlook for 2026 with Jean Lemierre, Chairman of the Board of Directors of BNP Paribas.
A look back at the key developments of 2025, in particular the remarkable resilience shown by the global economy in the face of the US tariff shock, the reasons for this resilience, but also the areas of concern.
Notwithstanding the new US economic policy, which is highly interventionist in terms of trade policy and conflictual, with the longest shutdown in history, the watchword for 2025 was the resilience of growth performance. 2026 should start under the same auspices, with the Trump administration pursuing its agenda, the key elements of which are the renewal of the Fed governor and the risk of the Fed losing its independence. In Europe, the challenges are significant, with a substantial political agenda, including the implementation of Rearm EU, but not limited to that. In a still uncertain environment, we nevertheless believe that growth should return, despite an increasing competition from China
Will growth in emerging countries in 2026 be as resilient as in 2025? Continued monetary easing in the US and disinflation would suggest so. We must also reckon with the Chinese juggernaut, which could pose a threat through the aggressive redeployment of its exports or a boon as a trading and/or technology partner. In addition, financing conditions may not be as favourable as they have been in recent years. Finally, there will be a busy election schedule.
Fireside chat between Jean Lemierre (Chairman of the Board of Directors of BNP Paribas) & Isabelle Mateos y Lago (Group Chief Economist).
This is my last contribution to Ecoweek before my retirement within a couple of weeks. Looking back at a career in banking and asset management that spans several decades, my main conclusion is that history repeats itself, at least to some degree. When I started in banking in 1987, a hotly debated topic was whether Wall Street had become massively overvalued and my first task was to focus on the sustainability of Belgian public debt. Ironically, today the valuation of Wall Street is again a topic of intense debate and many advanced economies struggle to stabilize their elevated public debt ratio. This reminds us that in the long run, budgetary discipline is of paramount importance. Otherwise, governments will have to confront increasingly difficult choices
