The OMFIF Podcast Expectations and risks for the 2026 global economic outlook and beyond
Dec 16, 2025
Dennis Shen, chair of the Macroeconomic Council at Scope Ratings, shares insights on the global economic outlook for 2026. He discusses the potential risks of inflation, geopolitical tensions, and the challenges facing major economies like the U.S., China, and Europe. Shen warns about U.S. fiscal deficits influencing Federal Reserve policies and assesses China's efforts to navigate its housing crisis. He also emphasizes the need for caution in European fiscal limits and highlights systemic vulnerabilities in financial markets, driven by high valuations and non-bank leverage.
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Mature Cycle With Many Underappreciated Risks
- Global growth entering 2026 is resilient but the cycle is mature and risk-rich.
- Watch financial system risks, trade policy, sovereign debt, inflation and central bank independence.
Avoid Rushed Inflation Target Changes
- Be cautious about changing inflation targets now because it could unsettle market confidence and long-term rates.
- Expect the Fed to ease more in 2026, influenced by political and market pressures around the next Chair appointment.
Growth Targets Drive China's Stimulus Dependence
- China pursues a soft landing while still relying on stimulus to hit politically important growth targets.
- Those growth targets and stimulus dependency are negative for China's credit outlook over time.