Earnings Call, Interview, Conference Presentation
Goldman Sachs Exchanges: Outlook 2026 | Episode 2: Regional Perspectives
- U.S. GDP growth is projected at approximately 2.5% (Q4/Q4) in 2026, exceeding consensus expectations, driven by a front-loaded fiscal impulse worth over 0.5 percentage points in the first half of the year that fades to neutral by year-end.
- The U.S. effective tariff rate is expected to decline from an 11 percentage point increase to a 9.5 percentage point increase since the Trump administration began, with tariff impacts on growth largely confined to 2025 and potential Supreme Court action capping new tariffs at 15%.
- The Federal Reserve is forecast to implement two additional 25 basis point rate cuts in 2026, potentially lowering the target rate to 3.0–3.25%, though a faster pace of cuts is possible if labor market softening intensifies.
- The U.S. labor market is anticipated to slow in 2026 with job growth insufficient to match labor supply growth, exacerbated by corporate efforts to utilize AI for cost reduction and potential layoffs, presenting a downside risk to the otherwise neutral-to-positive growth outlook.
- U.S. inflation is expected to continue falling in 2026 as tariff-related price increases drop out of the year-over-year rate, though policy volatility and fiscal headwinds in 2027 could create downward pressure on growth.
- China's GDP growth is forecast at 4.8% for 2026, supported by 5–6% annual volume growth in exports, although the property sector is estimated to drag growth by 1.5 percentage points due to weak consumer spending and household wealth declines.
- Japan's real GDP is projected to grow at just under 1% in 2026, with headline inflation decreasing while the Bank of Japan continues monetary tightening, keeping yields in the 2% range.
- The Euro Area growth forecast for 2026 stands at 1.3%, aided by German public spending rising by roughly 2% of GDP to lift the economy above stagnation, while the ECB holds rates at 2% pending growth or inflation developments.
- In the UK, the bank rate is expected to decline from 3.75% to 3% during 2026 via three additional cuts, driven by rising unemployment, improving inflation data, and the move toward a neutral rate.
- Global trade uncertainty is expected to recede in Europe as regions digest 2025 tariff increases, creating a backdrop of fading trade tensions, while overall risks to the U.S. outlook remain tilted to the downside on a probability-weighted basis.