History tends to repeat itself in advanced economies. Once again, growth ultimately fell short of expectations by only a small margin in the first half of 2026, despite the conflict in Iran. As early as 2025, the impact of tariffs was less severe than feared. This is a sign that structural factors (notably AI, defence and electrification) are underpinning growth in these countries and are expected to continue to do so in 2027. However, there are significant risks to the economic outlook, primarily of a geopolitical nature, with a significant upside risk to inflation and interest rates
GDP, inflation, unemployment, current account balance, public deficit and public debt: key indicators for the second quarter of 2026
The drivers of economic growth in each country examined.
Economic and financial forecasts as of September 2026.
As we begin the 2026 financial year, long-term sovereign bond yields are reaching unprecedented highs not seen for decades. Why is this happening? Is it sustainable? What are the implications for the world’s various economies? These are just some of the questions addressed in this new Special Edition video, introduced by Chief Economist Isabelle Mateos y Lago.Drawing on insights from the banking sector and teams specialising in emerging and advanced economies, the economists from Economic Research will explain why the rise in bond yields is problematic.
When economists talk about public debt, they often refer to the ‘sustainability’ of the debt. Hélène Baudchon, deputy chief economist, explains what this means and when a debt trajectory can be considered unsustainable.
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Equity indices, currencies, commodities, bond markets.
Overall, based on data available through August 2026, the inflationary impact and the negative effect on activity of the current energy shock remain significantly lower than the 2022 shock. Due to renewed tensions in the conflict in Iran and, consequently, on hydrocarbon prices, inflation is moving up again, but still in a limited way for now and driven solely by energy prices. Overall, confidence surveys do not show any signs of these negative trends.
Oil and gas markets remain volatile and followed different trajectories during August. The gas market does not benefit from the buffers in place in the crude oil market. Oil prices have stabilised at a high level, widening the gap compared to the 2022 crisis. While the increase in gas prices remains lower than that seen following Russia's invasion of Ukraine, the pace of the price increase is high.
The expectation that the surge in inflation, driven by this new energy shock, would be more moderate than in 2022 (with demand being less dynamic and supply less constrained) is confirmed. However, following the Memorandum of Understanding (MoU) signed in mid-June between the United States and Iran, inflationary risk has eased but has not disappeared. This MoU had seemed to reduce the risk of a severe escalation of the conflict, but since mid-July and the resumption of hostilities, it has entered a new phase of tensions, once again driving up hydrocarbon prices
Oil and gas markets lack direction amid persistent instability in the Strait of Hormuz. While oil prices have thus far reacted similarly to the two energy shocks (2022 and 2026), the rise in gas prices remains lower than the increase seen following Russia's invasion of Ukraine.
Equity indices, currencies, commodities, bond markets: Rates took off and tech slid further, leading Europe stock to outperform.
Shocks are mounting, but growth is holding up. Although GDP figures for the Eurozone, France, Germany and the United States are due to be published on 30 July, our nowcasts indicate that growth returned to its trend rate in the second quarter. This rate is approximately 1% per annum in the Eurozone, France and Germany, and 2% per annum in the United States. In Q2, the Eurozone is expected to benefit from sustained growth in Germany, with investment plans gaining momentum, while France is expected to see a rebound in exports and residential construction after a poor start in Q1. In the United States, growth is expected to remain driven by non-residential investment and household consumption but will be held back by strong imports.
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