Goldman Sachs predicts: Global economy will grow steadily in 2026, but the job market remains sluggish.

Goldman Sachs chief economist Jan Hatzius stated in a outlook report that the global economy is expected to maintain robust growth next year, but the labor market will remain relatively sluggish and inflation will gradually decline to the target level of central banks around the world. In a report released on December 18th titled "2026 Macro Outlook: Solid Growth, Stagnant Employment, Price Stability," Goldman Sachs predicts a global GDP growth rate of 2.8% in 2026, higher than the market's general expectation of 2.5%. Goldman Sachs believes that the US economy will continue to outperform other major developed economies, with a predicted GDP growth rate of 2.6% in 2026, largely benefiting from reduced trade drag, tax cuts, and a more accommodative financial environment. At the same time, Goldman Sachs predicts a 4.8% GDP growth rate for China in 2026 - also above market consensus, as strong export performance will offset the impact of weak domestic demand. The economic outlook for the Eurozone is relatively dim, with a predicted GDP growth rate of 1.3%, but Goldman Sachs points out that fiscal stimulus in Germany and relatively steady economic growth in Spain will help mitigate the pressure from long-term structural challenges. The report warns that although overall output growth remains stable, improvements in the labor market may struggle to keep pace with economic expansion. Goldman Sachs points out that rising productivity has increased the economic growth threshold needed to create new jobs, a "disconnect" that is particularly pronounced in the US - where despite solid GDP performance, the unemployment rate is slowly rising. In terms of inflation, Goldman Sachs expects that after a less-than-expected decline in inflation in 2025, the downward trend in inflation will accelerate in 2026. Goldman Sachs predicts that by the end of 2026, core inflation rates in the US and UK will decrease from the current level of around 3% to near 2%, reasons including the gradual fading of trade effects, slower wage growth, and cooling housing-related inflation. Additionally, declining oil prices, increased Chinese commodity supply, and faster productivity growth will also help alleviate price pressures. Goldman Sachs anticipates that the Federal Reserve will cut interest rates by 50 basis points next year, bringing the federal funds rate to a range of 3.0% - 3.25%. The bank believes that risks are skewed towards further easing, citing confidence in declining inflation, concerns about the labor market, and potential leadership changes at the Fed. Goldman Sachs also expects rate cuts in the UK and several emerging markets (especially Brazil), while the Eurozone may likely maintain unchanged interest rates. Overall, Goldman Sachs states that this macroeconomic outlook provides support for stock markets and many emerging market assets, suggesting that the market may still underestimate the positive impact of "solid growth + declining inflation" combination. However, the bank also warns that high valuations - especially in AI-related sectors - and a fragile labor market could increase market volatility, and downsize risks should not be ignored if growth expectations falter.