The Weekly Briefing from Capital Economics Special episode: The World in 2026 – Key drivers, key risks in global macro
Dec 12, 2025
Neil Shearing, Group Chief Economist at Capital Economics, joins Jennifer McKeown, Chief Global Economist, to explore predictions for 2026. They discuss how AI will primarily boost U.S. GDP, projecting a 2.5% growth fueled by technology investments. The duo highlights potential risks, such as the impact of a possible AI equity bubble burst and fiscal fragility in advanced economies. They also examine tensions in U.S.-China trade relations and the potential policy shifts in Europe, painting a complex picture of the global economic landscape.
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Episode notes
A Year Of Muddling Through Globally
- Global GDP should 'muddle through' with about 2.25% growth in 2026, below the historical average.
- The big stories will be country-specific rather than a dramatic global swing.
US Growth Fueled By AI And Productivity
- Capital Economics forecasts US growth at 2.5% in 2026, driven by further AI investment and a productivity pickup.
- That growth assumes a squeezed labour supply rather than a sharp rise in unemployment.
AI Benefits Are Concentrated In The US
- AI will be the dominant story but its macro benefits are concentrated in the US for now.
- Europe shows little sign yet of the ICT-driven investment surge seen in America.