Charlotte Mueller, chief economist of Swiss Re Europe, said that although the fragmentation of global competition in spheres of influence has shortened the path to adverse tail risk scenarios, the company still expects GDP growth to remain at a fairly good level in 2026.
Mueller said geopolitical risks are back in the spotlight at the start of the new year for Swiss Re and 2026 will be as volatile on the geopolitical front as last year.
Nonetheless, Swiss Re forecasts solid global real GDP growth, with economic growth expected to be similar to last year. The company also sees upside risks to forecasts in several key markets.
The U.S. economy enters 2026 with strong carryover momentum, driven by the reopening of the government after the shutdown, massive fiscal stimulus that boosted incomes in the second quarter of 2026, and stronger labor productivity. U.S. hiring fell at the end of the fourth quarter, partly due to delayed public sector layoffs, but falling unemployment means underlying economic conditions are stable.
In Europe, Swiss Re expects Germany’s €1 trillion fiscal stimulus to support euro zone growth this year, offsetting fiscal consolidation efforts in other countries.
In China, despite strong PMI data, Swiss Re expects economic growth to slow due to weaker household consumption and weaker fiscal support.
Mueller continued: “On the inflation front, we continue to expect inflation in the United States to persist on the back of economic resilience and continued tariffs to be passed on to prices. In contrast, in Europe and China, we continue to expect inflationary pressures to weaken, and we even pointed to further downside risks to the near-term CPI inflation outlook in the euro area.”
“Finally, on the central bank side, we will see the Fed continue to lower policy rates this year, although the level of rate cuts will not be as low as in the euro area, and the European Central Bank will stabilize the deposit rate at 2% this year. In Japan, by contrast, we will continue to move in the other direction and raise interest rates, as policy differences in the Asia-Pacific region are widening.”
