Fitch Ratings has projected a largely stagnant global growth trajectory for 2026, highlighting a combination of fiscal, political, and structural risks that could influence the economic landscape worldwide. In its latest report, the agency noted that while uncertainty over US tariff policy has eased following recent announcements and trade agreements, the broader economic impact remains pending. Volatility in global markets is expected to persist, albeit within a narrower range than experienced in 2025, as legal disputes, US-China competition, and the scheduled review of the United States-Mexico-Canada Agreement (USMCA) continue to weigh on market sentiment.
The rating agency identified several downside risks that could derail growth next year. These include the potential re-escalation of trade tensions, a sharper-than-expected slowdown in China’s economy, reassessments of returns on AI-related investments, possible overheating in the US economy, and unexpected financial market shocks. These vulnerabilities underline the fragility of the global economic recovery and the sensitivity of markets to geopolitical and policy developments.
Fitch also emphasized deeper structural factors that will shape the 2026 outlook. Rapid technological advancements, shifts in global trade patterns, geopolitical realignments, and evolving financial market dynamics are expected to exert material influence on sovereign credit conditions. Countries may face mounting pressure to adapt to changing trade flows, integrate digital and AI technologies effectively, and maintain financial stability amid a complex geopolitical environment.
Fiscal risks are likely to intensify in several major economies. Fitch warned that public debt levels will continue to rise, driven by substantial budget deficits in countries such as the United States and China. Rising interest costs, subdued GDP growth, and structural expenditure obligations are expected to further strain government finances. Coupled with challenging political environments, these pressures could complicate efforts to achieve sustainable fiscal balance.
Political risks remain elevated, according to Fitch. The agency highlighted the potential for instability stemming from shifts in US foreign policy, the ongoing rivalry between the US and China, military conflicts, election cycles, and growing public dissatisfaction over inequality, corruption, and youth unemployment. These political dynamics, combined with fiscal vulnerabilities, could exacerbate uncertainties and create headwinds for sovereign credit conditions.
Despite these challenges, Fitch noted that sovereign rating outlooks remain broadly stable heading into 2026. The agency recorded eight net rating upgrades in 2025, with seven of these occurring in emerging markets, reflecting pockets of resilience amid global uncertainties. Currently, Fitch lists ten positive outlooks and nine negative outlooks, indicating that while risks are rising, credit stability has not deteriorated significantly across the global landscape.
Overall, Fitch’s assessment underscores that global growth in 2026 is expected to remain flat, constrained by structural shifts, geopolitical tensions, and fiscal and political pressures. Policymakers and investors will need to navigate these uncertainties carefully to sustain economic stability and maintain confidence in financial markets. The report reinforces the importance of closely monitoring global trade policies, technological adoption, and sovereign fiscal positions in the year ahead.
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