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Report summary

Despite the US-Iran war and its associated energy shock, the global economy continues to hold firm. Global GDP growth is forecast at 2.5% in 2026, an upgrade from 2.3% in our previous update, with a further rebound to 3.0% expected in 2027. Three factors underpin this resilience: strategic energy reserves, retreating oil prices as alternative export routes are maximised, and an ongoing AI investment boom bolstering growth across the US, China and Asia. However, risks remain elevated. The collapse of the US-Iran Memorandum of Understanding has delayed prospects for a resolution, and an extended disruption to transit through the Strait of Hormuz could yet tip the global economy into recession. We are in a new era of elevated geopolitical risk that is unlikely to subside.

Table of contents

  • Executive summary
  • US-Iran war drags but global economy holds firm
  • Middle East: uneven economic shock
  • India feeling the pressure
  • AI boom
    • US riding the wave
    • Boost for Asia’s exporters
    • China sluggish
    • Is Europe missing out?
  • Industrial production: energy headwinds stronger than AI tailwinds
  • Navigating macro megatrends

Tables and charts

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What’s included

  • Global economic outlook Q3 2026: approaching a tipping point

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