The conflict in the Gulf has escalated in recent days, with an increase in strikes targeting oil and gas facilities (on both sides). The impact on energy prices has therefore intensified. A relatively rapid de-escalation of the conflict is unlikely, whilst there is a growing prospect of the conflict worsening along with its macroeconomic effects (higher inflation, lower growth). Central banks have taken note of this this week, but are waiting for greater clarity on how events will unfold before deciding how to respond. The markets, too, are taking a more cautious stance and anticipate that central bank will adopt more restrictive policies than previously expected for over the rest of the year. So do we.
For several years, Central Europe has been facing a marked demographic decline. Its magnitude varies from one country to another. The total population decline from 2004 to 2025 ranges from -0.3% in Slovakia to -17.2% in Bulgaria. The Czech Republic is the only country in the region to have seen a population increase over the same period. The working-age population (ages 15–64) is also declining. However, the situation is less unfavourable in Hungary, Poland, the Czech Republic and Slovakia, while Romania and Bulgaria are experiencing a more significant decline due to migration patterns. Net migration flows were negative for Bulgaria until 2019 and for Romania until 2021. However, this trend has reversed in recent years
As in 2022, the energy shock will affect emerging and developing economies. Today, as in the past, this shock is a negative-sum game between importing and exporting countries. Furthermore, although this is basically a supply shock, central banks in emerging economies may tighten their policies if they need to counter downward pressure on exchange rates, in order to prevent inflation from rising too sharply. However, compared to 2022, there are mitigating factors: 1/ the absence of a shock to agricultural commodity prices so far; 2/ AI, which is an external growth driver for Asian countries in particular; and 3/ the Fed is expected to adopt a more accommodative stance than in 2022 in response to the anticipated rise in inflation
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 conflict in Iran is already having a significant impact on energy prices, particularly oil and gas. Inflation should therefore rise in March. Beyond that, the outlook will depend on the evolution of the conflict, but the situation remains highly uncertain.Three types of scenarios are plausible:1) A return to the status quo ante on the hydrocarbon market after a few weeks;2) A prolonged period of political uncertainty in Iran leading to a relatively modest, but sustained, rise in oil and gas prices;3) Acute and sustained tensions over oil and gas supplies. The latter two scenarios would constitute a stagflationary shock, i.e. one that slows growth and increases inflation.Fortunately, growth was generally robust on the eve of the shock
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.
With the rise of artificial intelligence (AI), emerging countries with strategic resources—such as critical metals and semiconductor production capacities—are becoming key players. Countries that are well positioned within AI supply chains benefit from both an economic growth engine and an asset to leverage in their international relations. Industrialised countries in Asia, which account for over 85% of the global export of electronic chips, are best placed to capitalise on the increasing demand for AI. However, this advantage comes with greater exposure to the risk of a technology market correction
The latest economic news.
Sub-Saharan Africa has gone through 5 years of shocks that have weakened its public finances between 2020 and 2024. Over this period, public debt has risen rapidly, fuelling concerns across the region.
In 2025, emerging economies successfully navigated various shocks, including US protectionism, conflicts, and geopolitical tensions, largely due to Chinese exports, monetary easing, and ongoing disinflation against a backdrop of falling oil prices. Overall, financing conditions remained favorable, at least during the first half of the year, with most currencies appreciating against the dollar. In addition, macroeconomic imbalances, particularly external ones, were kept in check. For 2026, a slowdown in growth is the most likely scenario, but stabilization or even consolidation cannot be ruled out. Asia is expected to remain the most dynamic region.
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.
