Growth Inflation Fiscal

1. Overall Summary

Global 2026 is framed as continued expansion, not recession, with real world GDP clustered around 3–3¼% and DM growth near trend (US ≈2–2½%, euro area ≈1%, Japan ≈1%) while EM/Asia run ~4–5% BofA p.2, UBS p.59, KKR p.29]. Almost all houses expect inflation to stay above pre‑COVID norms, with US CPI mostly in the ~3% area versus euro area and Japan closer to target or slightly below, and China near 0% Barclays p.5, KKR p.29, BofA p.2, UBS p.59]. Fiscal policy is structurally loose—US deficits around 6–7% of GDP, euro area/G7 debt ratios still rising, and large defense/infra programs in the US, Germany, Japan and EU—providing material demand support but entrenching debt and "financial repression" dynamics KKR p.65, UBS p.36–38, T. Rowe p.3–4]. AI‑ and electrification‑led capex is universally treated as a major growth pillar, already adding 0.5–1ppt to US growth via investment in 2026, even where productivity gains are not yet fully visible Barclays p.5, JPAM p.6, UBS p.14–16, BofA p.4]. The sharpest split is over US inflation and the Fed path in 2026: some see room for multiple cuts with inflation drifting back toward mid‑2s Barclays p.19, BofA p.2, UBS p.59], while others argue the Fed may barely cut—or not at all—because inflation and politics remain too hot T. Rowe p.3, MS p.11–14, Stifel p.19].

2. Where Analysts Agree

No 2026 global recession; growth is positive but not booming. JPAM explicitly says "recession unlikely in 2026" JPAM p.7]; JP Morgan (JPM) has US around 1–2% after a mid‑year burst JPM p.3]; BofA and UBS put global GDP at ~3.3% and 3.1% respectively in 2026 BofA p.2, UBS p.59]; KKR is above‑consensus but still in low‑single digits (US 2.3%, EA 1.1%, China 4.6%, Japan 0.9%) KKR p.29].
Inflation normalizes but stays above pre‑COVID "1–2%" in most DMs. Barclays, KKR, BofA, UBS and T. Rowe all have US headline around 2.8–3.0% in 2026 Barclays p.5, KKR p.29, BofA p.2, UBS p.59, T. Rowe p.5]. Eurozone sits near but slightly below 2% Barclays p.9, KKR p.43, BofA p.2, UBS p.59]. China is mildly disinflationary to flat Barclays p.7, KKR p.50, BofA p.2, UBS p.59].
Fiscal policy remains expansionary almost everywhere. US deficits stay high: Barclays sees ~7% of GDP with $1trn in annual net interest Barclays p.6]; KKR projects 6–6.6% of GDP US deficits through 2029 KKR p.65]; JPAM cites OBBBA adding ~1ppt to 2026 US growth JPAM p.11]. Europe ramps defense/infra (German 2026 spend up >€80bn, ~1.8% of GDP; EU defense ~3.5% of GDP; NATO targets 5% by 2035) Goldman p.9, BofA p.3, BlackRock p.10, Goldman‑Summary p.5]. Japan delivers 2–3%‑of‑GDP supplementary budgets KKR p.51].
AI/"build‑out" capex is a central 2026 growth driver. BlackRock sees investment's contribution to US growth at 3x its historical average in 2026, driven by AI BlackRock p.5]. JPAM and JPM emphasize AI/data‑center capex at 1.2–1.3% of US GDP and still rising JPM p.3, JPAM p.6]. UBS expects AI capex to reach ~1% of global GDP by 2030 UBS p.16]. BofA and Brookfield both frame AI as a $7–8trn capex, $10trn productivity story over the decade Brookfield p.5, BofA p.4, BlackRock p.4–6].
Public debt ratios are high and rising; consolidation is unlikely. UBS has G7 debt around 126% of GDP in 2025, heading toward 137% by 2030 UBS p.36]; Barclays flags US gross debt at ~126% of GDP by 2026 Barclays p.5]; KKR sees US deficits structurally above 6% of GDP KKR p.65]; BofA explicitly expects no return to pre‑COVID fiscal restraint BofA p.3]. UBS and KKR both emphasize a regime of higher term premia and financial repression rather than rapid austerity UBS p.36–38, KKR p.12, p.79].
Labor constraints and immigration limits cap potential growth. JPM and KKR stress US net immigration collapse, driving sustainable NFP down to 0–100k/month and limiting potential growth to ~2% despite low unemployment JPM p.3, KKR p.34–35]. HSBC and T. Rowe likewise highlight US immigration "plummeting" and aging as key to sticky inflation and supply constraints HSBC p.3, T. Rowe p.11].
China delivers mid‑single‑digit growth with very low inflation, constrained by housing and local‑government balance sheets. Barclays, KKR, BofA, UBS and Goldman all cluster around 4–5% GDP, ~0–0.8% CPI for 2026, with fiscal support tied to 4% official and ~8–9% "augmented" deficits and limited room for broad‑based stimulus Barclays p.7–8, KKR p.50–51, BofA p.2, UBS p.59, Goldman p.9].

3. Where Analysts Disagree

US inflation regime and Fed cuts. Barclays, BofA and UBS have US inflation easing toward 2.4–2.9% and assume Fed funds around 3–3¼% by end/mid‑2026 with multiple cuts Barclays p.19, BofA p.2, UBS p.59–60, JPAM p.11]. KKR and Stifel see a higher resting heart rate (~2.5–3% core, ~2.7% PCE) and stress that 2% is not regained, but still allow for moderate easing KKR p.37–38, Stifel p.19, p.34–36]. In contrast, T. Rowe and Morgan Stanley argue the US is in an explicit "run it hot" inflationary regime, inflation likely remains above 3% and the Fed may cut less than markets expect—or not at all in 2026 T. Rowe p.3–5, MS p.11–14].
Strength and durability of US real growth. BofA, KKR, HSBC and T. Rowe are constructive, with US GDP at or slightly above trend (~2.3–2.4% in 2026) and AI/fiscal driving an upside surprise BofA p.2, KKR p.29–31, HSBC p.3–5, T. Rowe p.3]. JP Morgan, JPAM and UBS are more moderate, keeping US near ~2% with a "soft patch then re‑acceleration" profile JPM p.3, JPAM p.11, UBS p.22–23]. Stifel is much more cautious, seeing weakening core private demand, a "shaky" consumer and a meaningful 25% recession probability, even with OBBBA adding ~50bps to mid‑2026 GDP Stifel p.1, p.5, p.8–10].
Net fiscal impulse sizing and sustainability. JPAM and JP Morgan treat OBBBA as adding ~1ppt to US GDP in 2026 JPAM p.11, JPM p.3], BofA and KKR are closer to +0.5ppt BofA p.15, KKR p.29, p.32], and Stifel quantifies about +0.5ppt "padding" but emphasizes deficits are already ~6% of GDP and broad money growth ultimately compresses equity multiples Stifel p.1, p.5, p.40]. UBS and KKR stress that structurally high deficits push the system toward financial repression and higher term premia, while HSBC downplays near‑term sustainability concerns, arguing deficits are already in the term premium HSBC p.18, p.22; UBS p.36–38; KKR p.12–14].
AI's macro payoff by 2026. BlackRock, Brookfield, UBS, KKR and MS lean toward a large, ongoing AI capex boom with clear macro relevance and plausible upside productivity scenarios (e.g., +1–1.5ppt to growth in bull cases) BlackRock p.4–6, Brookfield p.5, UBS p.14–16, KKR p.3–5, MS p.14]. JPM, Stifel and Goldman are more skeptical near term: they acknowledge high AI capex levels (1.2–1.3% of US GDP) but stress that aggregate productivity data have not yet moved, and warn a reversal in AI investment could expose underlying weakness and even trigger a hard landing JPM p.3–4, Stifel p.10, p.32, Goldman p.23, p.28].
Inflation in Europe and ECB reaction. Barclays and Goldman see euro area inflation undershooting and think markets overprice ECB on hold—rate cuts are plausible if growth disappoints Barclays p.9–10, Goldman p.11]. KKR/BofA/UBS see inflation roughly at or just under 2% with ECB largely steady; KKR flags later ETS2 carbon as a 2028 risk KKR p.43–44, BofA p.2, UBS p.22]. T. Rowe goes further, positing front‑loaded exports ahead of tariffs will leave 1H26 particularly weak and raise odds of a cut as early as March 2026 T. Rowe p.4–5].

4. Core Narrative by Sub-Areas

A. US: soft‑landing consensus, different flavors of "sticky" inflation and fiscal lift

Moderate‑growth, sticky‑but‑manageable inflation camp (Barclays, BofA, UBS, JPAM, JPM):
US real growth around 2–2½% in 2026, helped by OBBBA, AI capex and still‑solid high‑income consumption, but constrained by weak labor supply and tariffs Barclays p.5–6, BofA p.2, JPAM p.11, JPM p.3, UBS p.22–23].
Inflation hovers near 3% in 2026, peaking slightly above 3% mid‑year as tariffs bite then gliding toward mid‑2s by 2027 JPM p.3, UBS p.22, BofA p.2]. Fed funds end up just above 3% after 2–3 more cuts Barclays p.19, BofA p.17, UBS p.60, JPAM p.11].
Fiscal stance: OBBBA/OBBBA‑style acts drive meaningful but not explosive stimulus (0.5–1ppt of 2026 GDP), interacting with still‑elevated deficits and large refinancing needs; debt ratios edge higher but no acute crisis is assumed JPAM p.11, Barclays p.6, KKR p.65, UBS p.36].

Higher‑inflation, “run it hot” camp (MS, T. Rowe, KKR, Stifel, HSBC):
MS explicitly argues the US is in a post‑WWII‑style inflationary regime, with nominal GDP targeted at 6–7% (roughly half real, half inflation) to erode debt, and inflation staying above 2% for "years, if not decades" MS p.11–12]. T. Rowe expects 2026 inflation to rise and remain above target, partly tariff‑driven, and warns the Fed "may not be able to lower rates next year at all" T. Rowe p.3–5].
KKR similarly embeds a "higher resting heart rate" of US CPI at ~2.5% core, with 2026 headline at 3.0% (tariff‑boosted) and 2027 at 2.5% KKR p.37–38]. Stifel's PCE model yields ~2.7% "sticky" PCE with supercore at 3–3½%, back to pre‑GFC norms Stifel p.19, p.34–36].
Policy: these houses stress political and structural constraints—high debt (>120% of GDP), tariffs, immigration curbs—will keep the Fed cautious; they warn of either insufficient cuts or a renewed tightening later if inflation re‑accelerates MS p.11–14, T. Rowe p.3, KKR p.37–38, Stifel p.35–37].
Growth is still positive but more fragile; Stifel in particular flags weakening "core" GDP, a shaky consumer (68% of GDP), and a non‑trivial 25% recession probability despite tax‑cut support Stifel p.1, p.8–10].

B. Eurozone / UK: fiscal rearmament vs structural drag

Eurozone:
All agree 2026 real GDP is around 1–1.4%, making Europe a slow‑growth DM laggard Barclays p.9, KKR p.29, BofA p.2, UBS p.59].
Barclays and Goldman stress that Germany's large infrastructure/defense packages (2026 spend up >€80–100bn, ~1.8% of GDP) Barclays p.9, Goldman p.9, p.14] provide an important capex tailwind, but are offset by normalized Spain, US tariffs and China competition, leaving growth only modestly improved Barclays p.9–10, Goldman p.18].
Inflation is expected to be below or at 2% (Barclays 1.7%, BofA 1.6%, UBS 1.8%) Barclays p.9, BofA p.2, UBS p.59], with KKR highlighting ETS2‑related upside from 2028 onward KKR p.41]. ECB is generally expected to hold or ease slightly, depending on how sharply growth and inflation undershoot Barclays p.10, Goldman p.11, UBS p.22–23].
Fiscal risks are localized: France's long‑end yields now trade at Italy‑like levels, reflecting concerns about stalled consolidation Goldman p.6, p.13; Barclays p.20].

UK:
Barclays and UBS see ~1.1–1.4% GDP and inflation near target (~2%) by 2026 Barclays p.11, UBS p.59]. Barclays expects a £30bn fiscal "black hole" leading to a mildly tighter budget (taxes up, some spending restraint), which modestly dampens growth but allows BoE more room to cut to 3.5% Barclays p.11–12].
Goldman and T. Rowe echo a UK shift from very loose toward gradual consolidation, with more BoE easing than currently priced Goldman‑Summary p.14, T. Rowe p.4].

C. China / EM: low‑inflation, policy‑managed glide path

China:
Barclays, KKR, BofA, UBS and Goldman all plant 2026 real GDP in the 4–4¾% range and CPI near 0–0.4%, undershooting global norms Barclays p.7, KKR p.29, BofA p.2, UBS p.59, Goldman p.9].
Drivers: slow property adjustment, high local‑government debt (augmented deficits ~8.5% of GDP), and "rebalancing" toward services, green tech and AI Barclays p.7–8, KKR p.46–51, BofA p.3]. Stimulus is targeted and ongoing (ultra‑long special bonds, consumption support), but a "material boost is unlikely" T. Rowe p.4–5].
Inflation remains structurally weak; KKR explicitly forecasts 0.3% CPI in 2026–27, below consensus KKR p.29, p.50]. UBS and BofA see gradual firming but still well below 2% UBS p.59, BofA p.2].

Broader EM:
BofA and UBS forecast EM GDP around 4.2–4.4% in 2026 with inflation easing and EM central banks already well into cutting cycles BofA p.2, UBS p.59]. BlackRock and HSBC highlight improved EM fiscal/monetary management, rating upgrades and high real yields as structural supports BlackRock p.14, HSBC p.3, p.22–23].
Goldman and T. Rowe stress that a softer dollar and lower oil prices reduce imported inflation, enabling further EM easing, though tariff and geopolitics remain wildcards Goldman‑Summary p.7, p.14; T. Rowe p.3–5].

D. Japan: reflation outlier

KKR, BofA, UBS and Goldman converge on ~0.7–1.0% GDP and ~1.6–2.0% CPI in 2026, with inflation above target for a multi‑year stretch (41 months and counting) and wage growth around 3–4% BofA p.2, UBS p.59, KKR p.29, p.53–54, Goldman‑Summary p.14].
Fiscal policy remains expansionary: KKR highlights a JPY 17.7trn supplementary budget (~2.8% of GDP) plus added inflation‑relief measures KKR p.51–52]; Goldman expects Takaichi to prioritize defense, nuclear and tech spending Goldman‑Summary p.7].
BoJ is seen as normalizing slowly—raising rates but staying well below peers—making Japan a unique DM with positive nominal growth and reflation but still‑easy monetary policy KKR p.53–54, Goldman‑Summary p.14, UBS p.59].

5. Key Conditional Risks

AI capex and monetization—boom or bust. A sharp slowdown in AI/data‑center investment (driven by energy constraints, permitting, or revenue shortfalls) would remove a key growth engine: BlackRock warns capex plans could be "walked back" if power bottlenecks bite BlackRock p.9]; JPM and Goldman note that an "unwind of AI‑related investments" could flip the US from soft to hard landing JPM p.4, Goldman‑Summary p.18]. Conversely, faster‑than‑expected monetization (KKR's "Goldilocks" or UBS's tech‑boom scenario) could deliver stronger growth with manageable inflation KKR p.58–59, UBS p.48].
Tariff trajectory and legal outcomes. US effective tariff rates in the mid‑teens to high‑teens are a central inflation and fiscal variable; KKR's base‑case effective rate is 15% with a 9–23% range KKR p.27, p.32–33]. JPM highlights that a Supreme Court ruling curbing current tariff authority could lower realized tariffs and require refunds, mildly boosting growth and lowering inflation; conversely, escalation or higher pass‑through would push inflation higher and squeeze real consumption JPM p.3–4; Goldman p.6].
Fed/ECB reaction to sticky or falling inflation. If US supercore and wage pressures remain elevated (Stifel's 3–3½% supercore, KKR's 2.5% core run‑rate), the Fed may cut less or even re‑tighten in 2H26, raising recession odds and weighing on long‑duration assets Stifel p.35–37, MS p.12–14, KKR p.37–38]. On the other side, euro area inflation could undershoot 2%, forcing unexpected ECB easing and flattening curves Barclays p.9–10, Goldman p.11, UBS p.22].
Fiscal stress and term‑premium spikes. With US, France, UK, Japan and others running large deficits and rolling large stocks of debt, any shift in market confidence could trigger bond yield spikes, undermining growth and risk assets. UBS and KKR both stress rising term premia and the drift toward financial repression; Goldman notes long‑end yields in US and France increasingly reflect debt worries UBS p.36–38, KKR p.12–13, Goldman p.13].
China downside or upside surprise. A disorderly property correction or insufficient pivot to services could deepen deflation and drag on global goods demand, while aggressive stimulus or faster services growth could lift global manufacturing and commodities more than currently assumed Barclays p.7–8, KKR p.45–51, Stifel p.26].
Labor‑market tipping points. A non‑linear rise in unemployment as AI adoption and tighter policy feed through would undercut consumption and could quickly shift 2026 from "soft landing" to recession; KKR, JPM and Stifel all stress that vacancy/unemployment pairs are already near pre‑recession norms KKR p.34–35, JPM p.3, Stifel p.10]. Alternatively, continued tight labor and immigration constraints could keep wage inflation and services prices higher for longer, limiting central‑bank easing MS p.10, T. Rowe p.11, HSBC p.3, Stifel p.35–36].

6. Bottom Line

Across houses, 2026 is framed as continued expansion powered by fiscal deficits and AI‑capex, with US real growth near ~2–2½%, euro area around 1%, China ~4½% and global GDP just over 3% BofA p.2, KKR p.29, UBS p.59]. The investable tension is that inflation remains sticky near 3% in the US and ~2% elsewhere while deficits stay large (~6–7% of US GDP), pushing the system toward higher term premia and selective financial repression rather than a clean return to the pre‑COVID low‑inflation, low‑rate world KKR p.37–38, p.65; UBS p.36–38].

Baseline growth outlook by region — Expected 2026 GDP pace and key demand drivers

Source	Content
Brookfield Outlook	Medium‑ to long‑term global growth is framed as structurally strong, led by massive infrastructure, energy, digitalization and reindustrialization capex plus AI‑driven productivity that could generate over $10 trillion in productivity gains in the next decade [p.2, p.5, p.19–20]. Electricity and power system build‑out, reshoring/industrial policy, and large housing/senior‑living demand gaps act as key demand drivers [p.6–7, p.11–15, p.19, p.23–24].
Blackrock Outlook	U.S. growth in 2026 is supported by AI-led, capital‑intensive investment, with investment’s contribution to U.S. growth around three times its historical average, while underlying per‑capita trend growth stays near 1.9–2% unless AI manages to “break out” that long‑run pace via faster innovation [p.4–5]. AI capex, rather than labor‑market strength, is the dominant demand driver in the baseline, with a “no hiring, no firing” labor stasis in the U.S. [p.5].
Goldman Outlook - Summary	2026 global growth is moderate but uneven, with a more multipolar pattern and high regional dispersion in cycles and market outcomes [p.2, p.9]. US growth into 2026 is supported by AI‑driven capex and increased government spending but faces headwinds from slowing consumer spending, stagnant housing, and a weakening labor market [p.11, p.18]. Europe’s 2026 growth is expected to be aided by fiscal flexibility, reindustrialization, tourism, and resilient household balance sheets, narrowing the GDP growth gap with the US, while Japan’s growth is underpinned by wage‑supported consumer spending and corporate capex, and EM growth benefits from a soft dollar, lower oil, and easier financial conditions [p.5, p.7, p.14, p.18].
Goldman Outlook	Global growth remains positive but moderate, with the US balanced between weak consumption/housing and strong AI-driven investment and government spending, Europe recovering from a weak post‑COVID base via defense and infrastructure capex, Japan supported by wage‑driven consumption and capex, and EMs benefitting from softer dollar, disinflation and easing cycles [p.6, p.14, p.20, p.28]. German GDP is explicitly forecast at 1.4% in 2026 (1.8% in 2027), driven by higher public spending on infrastructure and defense [p.14]. A medium‑term view sees global nominal GDP growth about 70bps lower over the next five years than in the last decade, with a larger share from inflation than real growth [p.32].
Barclays Outlook	Global growth in 2026 is “slower but still positive,” with US GDP at 2.0% (AI‑driven investment and capital inflows doing much of the lifting amid a K‑shaped consumption pattern), China slowing to 4.0% as property and exports fade and the economy rebalances toward consumption/green tech/AI, the eurozone at 1.1% with modest support from German fiscal stimulus offset by external drags, and the UK at 1.4% in a “lukewarm” recovery dominated by cautious consumption and weak confidence [p.5, p.7, p.9, p.11, p.13]. Demand is shaped by US real wage prospects and wealth effects, Chinese efforts to lower saving and raise consumption, eurozone private consumption growing ~1.2% per year, and UK consumption only slowly recovering [p.5, p.7–9, p.11].
HSBC Outlook	US growth in 2026 is framed as resilient and “not late‑cycle,” with a strong capex cycle driven by AI, cloud data centres, reshoring, advanced manufacturing and favourable amortisation rules, alongside robust consumer spending supported by wealth effects and tax breaks [p.3–4, p.17–19]. EM and Asia are described as structurally resilient, benefiting from good growth prospects, digital demand and AI exposure, while Europe has potential via infrastructure and competitiveness investment but is slow to deploy its fiscal “room” [p.5–6, p.9–10, p.20].
JPAM Outlook	Global expansion is expected to continue into 2026 with a recession viewed as unlikely, underpinned by strong labor markets, early rate cuts, and AI/onshoring‑driven capex [pp.7, 9, 11]. U.S. growth in 2026 receives an extra boost of roughly 1 percentage point of GDP from the “One Big Beautiful Bill Act” via tax cuts and higher defense/critical industry investment [p.11]. Europe and APAC benefit from higher defense and infrastructure spending and broadly expansionary fiscal policy, supporting demand [p.11].
JPM Outlook	U.S. real GDP slows to about 1% annualized in 4Q25, accelerates above 3% in 1H26 on tariff‑rebate‑like tax refunds, strong AI‑related capex and equity‑wealth support, then cools back to a 1–2% pace later in 2026 as temporary fiscal impulses fade and immigration‑driven labor constraints bind [p.3]. Outside the U.S., discussion is limited to a qualitative view that higher public investment in Europe and Japan and household‑oriented fiscal measures in Japan support nominal growth, without explicit 2026 GDP numbers [p.8–9].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	Real growth in 2026 is solid and broadening in an early‑cycle expansion, with nominal GDP targeted in a 6–7% zone over time (roughly half real, half inflation) and corporate revenues outpacing nominal GDP as pricing power and a weaker dollar lift top‑line growth [p.11, p.18–19, p.24]. Demand is supported more by investment (capex, AI‑enabled productivity, free‑cash‑flow tailwinds) than by consumer stimulus, with the US the core focus [p.11, p.18–19, p.24].
KKR 2026 Outlook	Global expansion in 2026–27 runs modestly above consensus in most majors, with 2026 real GDP at 2.3% in the U.S., 1.1% in the Euro Area, 4.6% in China, and 0.9% in Japan, driven by fiscal deficits, AI/digital and infrastructure capex, and relatively healthy private balance sheets [p.13, p.29–32, p.35, p.44–45, p.51–53, p.82–85]. U.S. growth benefits from OBBBA stimulus, household wealth and benign credit; Euro Area from services and gradual capex upturn; China from digitalization, green transition and services offsetting real estate drag; Japan from “Abe‑ism 2.0,” negative real rates, wage gains and strategic capex in AI/semis/clean energy [p.31–32, p.38–42, p.44–47, p.51–53].
RIC 2026 BAML	Global GDP growth runs around 3.3% in 2026 with CPI about 2.4%, a “stable” but not booming backdrop [p.1–2, p.19]. Regional 2026 GDP/CPI forecasts are: US 2.4%/2.9%, Euro area 1.0%/1.6%, Japan 0.7%/1.9%, China 4.7%/0.0%, India 6.5%/4.4% [p.2]. Demand is supported by US fiscal stimulus (OBBBA, industrial base rebuilding, AI capex), robust consumer/services spending, and higher defense/infrastructure outlays in Europe and Japan alongside China’s shift toward domestic consumption [p.3, p.15, p.17, p.20].
TRowe Outlook	Global economy in 2026 runs at two speeds: the U.S. “shakes off its growth scare” and outperforms on the back of AI‑related capex, OBBBA‑driven fiscal expansion, and a re‑accelerating labor market, while eurozone growth weakens in 1H 2026 as tariff‑related front‑loading fades and manufacturing softens [p.3–5, p.14]. Japan’s growth is supported by labor shortages, rising wages, and additional fiscal stimulus [p.4–5], China’s growth is supported by targeted stimulus but remains structurally constrained with weak domestic demand [p.4–5], and EM ex‑China see “decent, if sluggish” growth with tariffs as a medium‑term wild card [p.3–5]. Overall global demand is skewed toward investment and public spending (AI/data centers, infrastructure, German fiscal expansion) rather than broad‑based consumption, with housing and personal spending lagging in the U.S. [p.8, p.14].
Stifel Outlook	2026 US growth is fragile and sub‑trend, with “core” GDP weakening alongside ISM PMIs and only temporarily supported by the ~+50 bps fiscal boost from the 2025 tax law into mid‑2026, while the consumer (68% of GDP) softens amid weaker real wage income and job growth and hyperscaler capex’s growth rate peaks so that investment adds less incremental support [p.1, p.5, p.10, p.18, p.25, p.30]. A broad global cyclical recovery into 2026 is unlikely without stronger Chinese credit stimulus, as the current 2025 impulse looks too small to lift global and US manufacturing PMIs meaningfully, and restocking‑driven growth impulses are absent [p.26–27]. Overall recession probability in 2026 is put near 25%, reflecting a tenuous labor market and consumer [p.8–10].
UBS Year Ahead	Global growth hovers just above 3% with world GDP at 3.1% in 2026, underpinned by resilient demand and easing monetary policy [p.59]. US GDP grows around trend at 1.7–2.0% in 2026 with a soft patch early in the year from tariffs and a softer labor market, then stronger 2H demand on tax cuts/deregulation and healthy household balance sheets [p.22–23, p.59]. Eurozone growth is subdued at 1.1% in 2026 but improves through the year on Germany’s fiscal stimulus, infrastructure/defense investment, and rising real incomes [p.22, p.27, p.59], while APAC ex‑Japan runs just under 5% and EM around 4.2% with Asia (China 4.5%–4.9%, India 6.4%) driven by lower rates, innovation/industrial upgrades, and stronger regional credit and tech supply chains [p.23, p.59].

Inflation trajectory and drivers — Views on persistence vs disinflation and main shocks

Source	Content
Brookfield Outlook	Inflation is treated as persistent enough to matter but manageable, with real assets valued for inflation‑indexed or inflation‑resilient cash flows and many investors increasing real estate allocations partly as an inflation hedge [p.5, p.8–9, p.22]. Moderate inflation is described as a tailwind for infrastructure debt and assumes rates can stabilize or fall without a new inflation spike [p.2, p.29–30].
Blackrock Outlook	Inflation is expected to remain sticky above the Fed’s 2% target into 2026, as a cooling but steady labor market and strong AI‑related investment allow gradual rate cuts without a full return to target [p.5]. Any rebound in business confidence and hiring risks reigniting inflation, especially in a world where absorbing large AI capex without a productivity breakout could require crowding out other spending or tolerating higher inflation [p.5]. Higher borrowing across public and private sectors and potential bond yield spikes tied to fiscal concerns are additional inflation‑linked risks [p.7].
Goldman Outlook - Summary	Global inflation has “diverged,” leading to increasingly different central bank paths, with US inflation embedded in a soft‑landing narrative and Fed decisions that hinge on labor data and tariff pass‑through to consumer prices [p.12, p.14]. Japan faces persistent inflation “consistently above target for 41 months,” sustained by robust growth and wage gains and likely prompting BoJ hikes, while the euro area has seen upside surprises in growth and inflation that argue for the ECB holding rates steady rather than resuming cuts [p.14, p.18]. In EMs, lower oil and a subdued US dollar reduce imported inflation and support ongoing easing, whereas tariff re‑escalation and regulatory shocks, especially around China, are highlighted as potential inflation and growth shocks [p.10, p.14].
Goldman Outlook	US inflation is treated as largely anchored, with tariff‑related price rises characterized as a one‑off level shift that could become more problematic only if pass‑through to consumer prices intensifies and hurts growth in 2026 [p.6]. Euro area inflation is at or slightly below target, creating downside risks and the possibility that the ECB may need to resume easing from its current 2% policy rate if inflation undershoots [p.6, p.11, p.24]. Japan has experienced above‑target inflation for 41 months, supporting a transition to a higher rate regime, while EMs are in broad disinflation with room for further easing as global rates fall and oil prices stay subdued [p.6, p.20, p.24].
Barclays Outlook	Inflation into 2026 is sticky in the US (CPI ~3.0%, held up by tariff pass‑through, tighter immigration constraining labour supply, and AI‑related electricity demand), disinflationary in the eurozone (1.7% as weak growth, a stronger euro, and China’s export deflation outweigh German stimulus and tariffs), back to target in the UK (~2.0% after a 2025 spike), and barely positive in China (0.8% amid structural deflation, overcapacity and weak demand) [p.5–7, p.9–11]. Persistent large deficits and borrowing in the US and parts of Europe risk keeping inflation “sticky” and limiting longer‑term policy flexibility, while tariffs and commodity moves are highlighted as key potential upside shocks [p.6, p.10, p.13, p.18–19].
HSBC Outlook	US inflation is judged “a bit too sticky” given resilient activity, labour‑supply bottlenecks (including “plummeted” net immigration) and ongoing AI‑related capex, implying fewer Fed cuts than markets price [p.3, p.5]. EM inflation has “decreased to near‑record lows,” leaving real rates “significantly high” and giving EM central banks room to ease [p.23]. Climate change, AI‑driven electricity demand, energy‑transition bottlenecks and rare‑earth/mineral supply risks are highlighted as medium‑term cost and inflation shock sources [p.13–14].
JPAM Outlook	Disinflation sufficient to allow policy rates to fall to roughly 3.25% for the Fed and 1.75% for the ECB by mid‑2026 is implicitly assumed, yet inflation is expected to remain relevant enough to make inflation‑linked infrastructure and real assets attractive [pp.11, 26]. Inflation is treated mainly through its impact on real yields, asset pricing, and the value of inflation‑protected cash flows rather than via explicit CPI paths or detailed breakdowns of goods vs. services inflation. [p.?]
JPM Outlook	U.S. CPI inflation hovers near 3% in late 2025, rises through mid‑2026 but peaks below 4% as new tariffs pass through to consumers, then gradually falls to about 2% by end‑2026 helped by lower oil prices and sliding shelter inflation, implying tariff‑driven pressures are transitory rather than structurally persistent [p.3, p.5]. Upside inflation risks stem from tariffs and potential extra fiscal stimulus (e.g., “tariff rebate checks”), while stronger disinflation would follow a tariff reversal via court ruling that lowers import prices and requires refunds [p.4–5].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	Inflation is characterized as part of a durable post‑COVID inflationary regime with “hotter but shorter” cycles, staying above the old 2% target and cyclically re‑accelerating in 2026 as pricing power improves and policy “runs it hot” to keep nominal GDP above borrowing costs [p.10–11, p.14]. Key drivers include tariffs and trade frictions, sticky services/healthcare/rent inflation, immigration‑driven wage dynamics, and AI’s dampening effect on high‑end wage growth, with the main risk being a renewed inflation spike forcing the Fed back into tightening in 2H26 [p.2, p.10, p.12–13, p.22–23].
KKR 2026 Outlook	Inflation settles into a higher‑than‑pre‑COVID “resting heart rate,” with 2026–27 CPI at 3.0%/2.5% in the U.S., 1.8%/1.8% in the Euro Area, 0.3%/0.3% in China, and 1.8%/2.0% in Japan, implying persistent but moderate inflation in most DMs and outright disinflation/deflation risks in China [p.10, p.14–15, p.29, p.37, p.43, p.50, p.53–54]. U.S. inflation is held up by labor, expectations and tariffs with housing becoming disinflationary; Euro Area hovers around target with future carbon‑pricing shocks; Japan sustains wage‑led reflation near 2%, while China’s weak domestic demand and property slump anchor very low prices [p.37–38, p.41, p.43–44, p.47–48, p.50–51, p.53–54].
RIC 2026 BAML	Global CPI inflation is projected at 2.4% in 2025–2027, with 2026 at 2.4%, implying inflation “to remain above 2%” rather than returning to pre‑COVID lows [p.1–2]. US price pressures stay near 3% in the nearer term, with 2026 CPI at 2.9%, helped higher by tariffs that have added roughly 0.5pp to inflation and constrained by structural labor supply issues and AI‑related productivity gains [p.2, p.15, p.17]. Risks balance downside labor-market softness against upside inflation shocks from tariffs and ongoing fiscal expansion [p.15, p.17].
TRowe Outlook	U.S. inflation is likely to rise and remain above the 2% target into 2026, anchored by expansionary fiscal policy, tariffs, and restrictive immigration amid high debt, leaving the Fed with limited scope to cut and a meaningful risk of “stickier” inflation around or above ~3% that erodes bond value [p.3, p.5, p.11, p.14, p.18]. Eurozone inflation should trend lower in 2026, helped by a stronger euro, potentially lower oil prices, and wage disinflation, while Japan faces upside inflation risks from wage growth and additional fiscal stimulus, and China’s weak domestic demand keeps CPI low [p.4–5]. EM inflation is broadly benign relative to history and expected to stay under control, with tariffs and staggered tariff effects across regions as key inflation shocks over the coming years [p.3–5, p.18].
Stifel Outlook	Core PCE inflation is projected to keep disinflating from post‑COVID highs but plateau around early‑1990s/pre‑GFC levels, with “sticky” PCE near ~2.7% in 2026 and supercore (core services ex‑housing, 50% of PCE) back at a persistent 3–3½% range that prevents a return to the Fed’s 2% target [p.19, p.33–36]. The inflation model assigns 65% weight to unit labor costs and 35% to non‑labor costs, with services‑heavy, labor‑driven supercore proving critical and sticky in a service economy; faster broad money growth from persistent large deficits also biases inflation higher over time [p.34, p.36, p.40]. Main upside inflation risks center on supercore staying elevated, which would force tighter real policy, while a downside surprise would be faster‑than‑expected disinflation toward 2% [p.35–37].
UBS Year Ahead	Global headline inflation eases from 3.3% (2025) to 3.0% (2026) and 2.7% (2027), reflecting disinflation without deflation [p.59]. US inflation re‑accelerates slightly to around 3.0% in 2026, peaking just over 3% in 2Q26 mainly via tariff‑related price pressures before settling back toward 2.4–2.2% by 2027–28 [p.22, p.59], while Eurozone inflation slips below the 2% target in 2026 (1.8%), allowing a stable ECB stance [p.22, p.59]. Upside inflation risks stem from second‑round effects of tariffs and profit‑driven pricing that could make inflation more persistent and constrain central bank easing [p.47].

Fiscal stance and near-term impulse — How 2025–26 budgets add or subtract from growth

Source	Content
Brookfield Outlook	n.a.
Blackrock Outlook	Fiscal policy in major DMs enters 2025–26 constrained by already‑high public debt and stretched deficits, limiting room for traditional stimulus even as governments pursue defense, infrastructure and energy‑transition priorities [p.7, p.10]. Germany has suspended its debt brake to raise defense and infrastructure spend, and looser fiscal rules in Europe are boosting energy investment, implying a modestly positive growth impulse in those areas despite overall tight fiscal space [p.10]. In EMs, improved fiscal management and a series of sovereign rating upgrades point to more stable, less pro‑cyclical fiscal backdrops rather than large new stimulus [p.14].
Goldman Outlook - Summary	Fiscal policy is a key near‑term growth driver, with increased US government spending and AI‑related public support contributing to growth even as concerns about fiscal health rise [p.11]. Europe sees an explicit positive fiscal impulse from Germany’s easing of the debt brake for defense and infrastructure and EU‑level reindustrialization programs, though early data suggest Germany’s expansion has had an underwhelming real‑economy effect and French politics pose fiscal risks [p.5, p.18]. In Japan, a Takaichi administration is associated with looser fiscal policy focused on defense, nuclear, and advanced tech, while several EMs benefit from public infrastructure and digitalization programs alongside easier monetary policy [p.7, p.8, p.14].
Goldman Outlook	US fiscal policy is unusually expansionary relative to economic strength; the OBBBA tax cuts and tariff revenues largely offset in the near term, leaving the deficit little changed to modestly lower while still adding $3.4T to the unified budget deficit over 2025–34 [p.6, p.9]. Germany’s late‑2025 fiscal package and infrastructure fund could raise 2026 public spending by more than €80bn (about 1.8% of GDP) relative to the 2024 budget, providing a significant positive impulse via defense and infrastructure [p.9, p.14]. Japan may see additional fiscal support in areas such as defense, nuclear and advanced tech under a Takaichi government, while Europe more broadly is moving toward higher defense/energy/security investment that adds near‑term growth support despite political and execution risks (e.g., France) [p.6, p.19, p.20, p.28, p.37].
Barclays Outlook	US fiscal policy features a deficit near 7% of GDP, $300bn/year of tariff revenues at risk, and the OBBA tax‑rebate providing short‑term support but with limited durable impulse to 2026 growth, leaving consumption dependent on real wage gains [p.5–6]. China runs an official 4% of GDP deficit but an 8–9% “true” deficit including off‑budget items, allowing only targeted stimulus as local‑government deleveraging restrains broad support [p.7–8]. Eurozone growth gets a modest 2026 lift from Germany’s “fiscal bazooka” (about one‑fifth of a €500bn infrastructure plan plus defence outlays outside deficit rules), partly offset by other regional drags, while the UK tightens slightly through tax and spending measures to close a ~£30bn gap, subtracting some demand but giving the BoE more room to ease if inflation allows [p.9, p.11–12].
HSBC Outlook	US fiscal policy is characterised as expansionary and largely pre‑set, with the “One Big Beautiful Bill Act” extending 100% bonus depreciation and setting an eight‑year fiscal path, plus tax breaks and a “no‑tax policy on tips” supporting consumption, all adding to near‑term growth [p.18–19, p.22]. Europe (especially Germany and the EU) has fiscal room for infrastructure and competitiveness spending but is slow in implementation, while many EM sovereigns are praised for responsible budget management and, in Mexico’s case, fiscal consolidation in 2026 [p.3–5, p.20, p.23]. The 43‑day US government shutdown is mentioned as a negative impulse with hard‑to‑quantify growth effects [p.21].
JPAM Outlook	Fiscal policy across major regions is characterized as clearly expansionary in 2025–26, with the U.S. “One Big Beautiful Bill Act” adding about 1 percentage point to 2026 GDP growth through tax cuts and increased defense/critical industry spending [p.11]. European countries are moving toward sharply higher defense outlays (some discussing 5% of GDP) alongside German infrastructure investment, while APAC fiscal policy remains broadly expansionary, together providing a sizable positive near‑term growth impulse and reducing recession risk [p.11].
JPM Outlook	U.S. fiscal policy is mildly expansionary in 2025–26: the OBBBA grants full expensing for equipment/R&D and new household tax breaks that surface as a “bumper crop of tax refunds” in early 2026, temporarily boosting demand, while tariff revenues above $29bn (Jun–Oct 2025) both fund government and depress real consumption as costs pass through [p.3]. Additional discretionary stimulus such as consumer “tariff rebate checks” is flagged as a plausible 2H26 upside that would raise both growth and inflation, while a court‑driven tariff rollback would modestly support growth with lower inflation [p.4].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	Fiscal stance shifts from consumption support toward investment support, with the One Big Beautiful Bill (OBBBA) and related tax provisions (R&D expensing, 100% bonus depreciation) lowering “cash” tax rates and providing a positive near‑term impulse to capex and free cash flow in 2025–26 [p.9–10, p.20–21]. Tariffs and reduced direct consumer fiscal support modestly subtract from consumption but are part of a deliberate rebalancing toward higher productivity‑driven real growth, making the net fiscal impulse more investment‑ than demand‑led [p.9–10].
KKR 2026 Outlook	U.S. fiscal policy provides a sizable positive impulse, with the $1.89trn OBBBA and related tax refunds adding about +0.5pp to 2026 GDP and large, stable deficits around 6–6.6% of GDP supporting demand even as tariffs subtract ~0.5pp from growth [p.29, p.32, p.44, p.49, p.65]. Euro Area’s near‑term impulse is tempered by the ETS2 delay and gradual defense/green capex build‑out; China sustains growth via a ~4% official and ~8.5% augmented deficit; Japan deploys repeated supplementary budgets (e.g., JPY 17.7trn ~2.8% of GDP plus additional 1.3–1.5% of GDP) and ultra‑long JGB issuance to fund strategic spending and support real incomes [p.40–43, p.50–52].
RIC 2026 BAML	Fiscal policy in 2025–26 provides a meaningful positive impulse via US OBBBA stimulus (including mid‑income tax cuts), industrial base rebuilding, and AI‑related capex, which help keep US growth above trend in 2026 [p.3, p.15, p.17, p.20]. Europe and Japan contribute additional support through higher defense and infrastructure spending, with Japan’s new administration explicitly aiming to accelerate nominal growth with fiscal expansion and the EU planning defense spending of 3.5% of GDP [p.3, p.15, p.17]. China’s policy mix seeks to curb excess industrial capacity and foster domestic consumption, adding a rebalancing, domestically driven component to growth rather than traditional heavy industrial stimulus [p.3].
TRowe Outlook	U.S. fiscal policy is strongly expansionary, with spending projected to rise by the equivalent of 23% of current GDP over 10 years and the OBBBA adding roughly USD 200–300 billion of front‑loaded stimulus in 2026 focused on infrastructure, energy grids, roads, bridges, data centers, and industrial capacity, providing a major growth impulse [p.3, p.8]. Germany’s “very large fiscal expansion” boosts growth but also raises bund yields and eurozone rates, while UK fiscal policy remains quite expansionary but is expected to see some consolidation, enabling more BoE easing; Japan is also expected to run expansionary fiscal policy that supports growth in 2026 [p.4–5, p.11]. China’s fiscal support is more targeted and unlikely to deliver a material growth boost, and EMs generally are not characterized by large new fiscal impulses in 2025–26 [p.4–5].
Stifel Outlook	The 2025 “One Big Beautiful Bill” tax law, even including tariffs, generates a swing from fiscal drag to stimulus, adding roughly +50 bps of “padding” to mid‑2026 GDP as the change in the budget deficit as a share of GDP turns positive in 2025–26 [p.1, p.5]. Beyond this near‑term impulse, fiscal policy remains highly supportive in level via large deficits but only modestly more stimulative in change terms, so growth still depends heavily on private demand and labor income [p.5, p.10].
UBS Year Ahead	Fiscal policy in major DMs is broadly supportive, with “government outlays already at ‘escape velocity’” and set to rise as a share of GDP absent consolidation, providing a positive demand impulse into 2025–26 [p.10]. Germany delivers a prominent pro‑growth fiscal impulse via plans to invest over 20% of GDP in infrastructure and defense, bolstering Eurozone growth prospects and capital formation [p.22, p.27]. Scenario analysis also embeds continued fiscal support in Europe and China in the 2026 base case, while acknowledging that sharper fiscal tightening would be a bear‑case risk to growth [p.48].

Debt levels, sustainability and market impact — Assess public debt paths, interest costs and term premia

Source	Content
Brookfield Outlook	n.a.
Blackrock Outlook	Public debt in the U.S. has surged to postwar highs, U.S. and UK deficits are stretched, and elevated debt combined with rising private leverage is expected to keep upward pressure on interest rates and term premia, contributing to higher yields and financial‑system vulnerability [p.7]. Higher borrowing across sectors raises debt‑service costs and creates a risk of bond yield spikes tied to fiscal concerns or tensions between inflation control and debt servicing, with any eventual AI‑driven easing of debt burdens viewed as slow and uncertain [p.5, p.7]. EM sovereigns show improving debt sustainability, reflected in a slew of net rating upgrades and stronger credit fundamentals, especially among higher‑yield issuers [p.14].
Goldman Outlook - Summary	n.a.
Goldman Outlook	Global public debt exceeds $100T, with the US debt‑to‑GDP ratio near post‑war highs and high deficits combining with higher real rates to steepen the trajectory of interest expenses and raise medium‑term sustainability concerns [p.6]. There is no single crisis threshold for debt‑to‑GDP; instead, worries focus on the mix of slowing growth, higher rates and lack of QE, which is increasingly reflected in long‑end yields, including rising 30‑year rates and French 10‑year yields now matching Italy’s as fiscal stress is priced [p.6, p.13]. Structural spending pressures—defense, climate transition, healthcare and pensions—plus large defense/transition plans (e.g., EU ReArm, NATO targets) both support growth and intensify future debt and term‑premium risks [p.6, p.9, p.37, p.45].
Barclays Outlook	Public debt ratios are elevated and mostly rising—US gross debt climbs from 123.6% to 125.7% of GDP by 2026 with nearly one‑third needing refinancing that year, a ~7% deficit and ~$1tn in annual interest payments, making “every single basis point” in yields critical and contributing to a $5.5tn five‑year funding gap and ~$1.5tn net issuance in 2026 [p.5–6, p.20]. Eurozone debt edges up to 89.9% of GDP with France already above 110% and long‑term spreads (e.g., French–German 30‑year >100bp) reflecting sustainability concerns; UK debt is high but roughly stable around 93% of GDP [p.9, p.11, p.20]. High supply, limited consolidation and structural demand changes (e.g., UK pensions) help keep term premia elevated and push central banks toward ending QT and potentially engaging in maturity‑management (“operation twist with a twist”) to stabilise bond markets [p.18–20].
HSBC Outlook	US deficits and the multi‑year fiscal path set by OBBB are seen as already embedded in the term premium on long‑dated Treasuries, muting additional yield pressure from debt worries, though DM debt sustainability concerns remain in investors’ risk matrix [p.5, p.21–22]. EM sovereigns are experiencing rating upgrades on the back of good growth and responsible budgets, helping local‑currency debt attract inflows, while European debt concerns particularly affect France, with Italy and Spain viewed more favourably [p.3, p.5, p.20, p.22–23].
JPAM Outlook	n.a.
JPM Outlook	n.a.
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	High debt and deficits are treated as structural, pushing policymakers to engineer nominal GDP growth of about 6–7% versus borrowing costs around 4% so that inflation and real growth together erode the debt‑to‑GDP ratio over time [p.11]. Market impact runs through a “run it hot” policy mix and tolerance of higher inflation, which supports risk assets in the near term but carries the medium‑term risk of a renewed inflation shock, higher rates, and multiple compression if the debt‑management strategy backfires [p.2, p.11–13, p.22–23].
KKR 2026 Outlook	High and persistent public deficits, especially in the U.S., are integral to the “Regime Change” toward structurally higher inflation and a positive stock–bond correlation, reducing the diversification value of government bonds and implying higher term premia [p.10, p.12, p.14–15, p.57, p.79]. U.S. deficits remain in the 6–6.6% of GDP range through 2029, and Japan funds repeated fiscal packages with ultra‑long JGBs, while Euro Area and China maintain sizeable but more contained fiscal cushions [p.50–52, p.65].
RIC 2026 BAML	n.a.
TRowe Outlook	U.S. government debt exceeds 120% of GDP and is set against an upward trend in fiscal spending (projected +23% of current GDP over 10 years), raising concerns about the difficulty of returning inflation to target and contributing to higher long‑term yields and elevated term premia, especially on Treasuries [p.3, p.11]. Expansionary fiscal policy in the U.S., UK, Germany, and France forces greater sovereign issuance, prompting questions about long‑run debt sustainability and requiring higher yields to attract buyers, with Germany’s expansion specifically lifting bund yields and dragging eurozone curves higher [p.4, p.11]. Debt levels in EMs, particularly Asia, are described as under control relative to history, limiting debt‑sustainability stress there, while inflation‑linked bonds in the U.S., parts of Europe, and Japan are seen as attractively priced hedges against underpriced inflation risk [p.4, p.11].
Stifel Outlook	Structural US fiscal settings—revenues near 18% of GDP versus spending above 24%—embed persistent ~6+% of GDP deficits that fuel rapid broad money (M3) growth, historically associated with falling equity valuation multiples over decade‑long horizons even as deficits support profits and growth [p.40]. The linkage from chronic deficits to money growth and lower P/E ratios is highlighted as a key market impact channel [p.40].
UBS Year Ahead	G7 gross government debt is projected around 126% of GDP in 2025, rising toward 137% by 2030, driven by aging populations and higher defense spending, making “rising government debt… one of the defining macroeconomic challenges of the decade” [p.36]. Meaningful fiscal consolidation is expected to be rare, so governments and central banks rely on forms of financial repression—keeping real rates low, managing demand for government paper via regulation and balance‑sheet policies—to contain interest costs and term premia despite high debt [p.37–38]. Episodes of yield spikes and fiscal scares (US, France, Japan, UK) are likely to recur, but policy interventions should periodically stabilize or lower yields, shifting some adjustment onto FX markets and raising currency volatility [p.37–38, p.47].

AI and investment supercycles in the macro mix — Role of AI/infrastructure capex in growth and leverage

Source	Content
Brookfield Outlook	AI is framed as a general‑purpose technology potentially unlocking over $10 trillion in productivity gains over the next decade, contingent on about $7 trillion of AI‑related infrastructure investment that spans data centers, power and digital networks [p.5, p.6, p.19–20]. This AI‑driven capex is embedded in a broader $100+ trillion global infrastructure “supercycle” to 2040, with leverage and private capital enabling large‑scale build‑out that underpins future GDP growth [p.5–7, p.11–12].
Blackrock Outlook	AI is a potentially unprecedented capital‑spending supercycle, with global AI capex ambitions of $5–8 trillion through 2030, most in the U.S., and with the contribution of investment to U.S. growth reaching roughly three times its historical average in 2026 [p.4–5]. The buildout is highly front‑loaded in data centers, compute and energy infrastructure, with revenues back‑loaded, prompting rising corporate leverage as firms borrow to bridge a financing “hump” and potentially pushing the macro system toward higher overall leverage [p.4, p.7]. A high‑end scenario where AI adds 1.5 percentage points to growth could generate $1.1 trillion in annual revenues and justify the capex with 9–12% returns, but absent such a productivity breakout, large AI capex risks crowding out other spending or fueling inflation [p.5–6].
Goldman Outlook - Summary	AI‑related capex is a central global growth driver into 2026, with hyperscalers already responsible for ~27% of S&P 500 capex and expected to see capex “rapidly ascend” as AI shifts from infrastructure build‑out to applications [p.3, p.4, p.17]. In the US, AI‑fueled investment and long‑term transformative projects are described as potentially masking underlying weakness in consumers, housing, and labor markets, raising the risk that any sharp reversal in AI investment could expose a weaker economy and push toward a hard landing [p.18]. Hyperscalers are financing this supercycle through heavy use of operating cash flow (95% now devoted to buybacks/dividends/capex vs. 80% in 2019) and increased bond issuance, so macro impacts run through productivity assumptions, equity leadership, and sector‑specific credit risks if returns on AI capex disappoint [p.17].
Goldman Outlook	AI capex, especially by hyperscalers, has repeatedly exceeded expectations and is expected to remain durable into 2026, acting as a major driver of US and global business investment and sectoral transformation in semiconductors, software, data and cybersecurity [p.8, p.15]. This AI and broader infrastructure capex boom (including $1.7T in North American manufacturing mega‑projects since 2021 and $3.3T in 2025 global energy investment) supports growth and may partly mask underlying weakness in consumption and housing, while also contributing to labor‑saving dynamics and uncertain long‑run return profiles [p.8, p.28, p.45]. The key macro uncertainty is whether AI‑driven investment can continue to offset softer parts of the economy or could reverse sharply, triggering a harder landing and financial tightening [p.23, p.28].
Barclays Outlook	AI‑related investment is a major US growth driver into 2026—having arguably prevented stagnation in 2025—with huge announced capex (OpenAI “more than $1 trillion”), but the pace of new commitments slows as focus shifts to delivery, likely tempering equity wealth effects and leverage expansion [p.5]. In China, AI is one of several levers to revive productivity alongside structural reforms but is framed as a medium‑term rather than specifically 2026 growth engine, while globally AI and electrification form part of a gradual, non‑linear productivity trend rather than a near‑term macro panacea [p.7–8, p.13]. Infrastructure needs are vast, with a projected $11tn global investment shortfall by 2040 [p.29].
HSBC Outlook	AI is portrayed as a core driver of a multi‑year capex supercycle, with AI alone estimated to add 1–2.5 percentage points to labour productivity over the next decade and 2026 described as a “busy building site” in the US due to AI, cloud, reshoring and related infrastructure build‑out [p.3–4, p.17–18]. This investment boom underpins strong earnings growth, supports US and EM/Asia growth narratives, and is reinforced by favourable tax treatment such as extended 100% bonus depreciation [p.4, p.18–20].
JPAM Outlook	A once‑in‑a‑generation capex supercycle driven by AI, electrification, and “electronification of everything” is expected to support global growth, with AI moving from proof‑of‑concept to large‑scale deployment and spurring heavy investment in data centers, networks, and power grids [pp.3, 6]. Across OECD markets, energy demand is projected to grow 2%–4% annually from 2025 into the 2040s, and U.S. power demand 1.7%–3.2% per year vs. a prior 0.4%, implying capex that materially outpaces depreciation for the first time this century and raises the role of leveraged infrastructure investment in the macro mix [pp.24–25]. [p.?]
JPM Outlook	AI‑related capex—particularly data centers—has surged to about 1.2–1.3% of U.S. GDP and is expected to keep rising, with 9% of firms integrating AI in production and 44% paying for AI models/platforms, providing a key medium‑term growth and earnings tailwind even though aggregate productivity gains are not yet visible [p.2–3]. This AI investment boom, together with related equity‑market wealth effects, is a central driver of the “hot” phase of U.S. growth in early 2026, but a reversal in AI enthusiasm or supply constraints could trigger recessionary or bear‑market dynamics [p.3–4].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	AI‑related investment is a key macro tailwind, contributing an estimated 40 bps of net margin expansion in 2026 (and 60 bps in 2027) via cost savings and productivity gains, with a growing share of firms reporting quantifiable AI benefits to efficiency and profitability [p.14, p.47–50]. Combined with bonus depreciation and R&D expensing, AI and broader capex cycles are expected to drive higher real growth and operating leverage, particularly in tech, financials, industrials, and other capex‑intensive sectors [p.20–21, p.33–34, p.54–55].
KKR 2026 Outlook	AI and digital/infrastructure capex constitute a core growth engine, underpinning a productivity boom with U.S. productivity slated to approach ~2% in 2026–27 and S&P 500 real revenue per worker already up 5.5% since the ChatGPT launch [p.3–5, p.4, p.35–36, p.82, p.138]. Massive AI/data‑center spending—Magnificent 7 capex+R&D projected at ~$875bn in 2026, hyperscalers allocating 60–70% of operating cash flow and increasing debt—raises growth but also introduces leverage and overbuild risks, while in China AI capex of roughly 0.5–3.5% of GDP adds support amid structural drags [p.4–6, p.23–26, p.35–36, p.50, p.57–59, p.85].
RIC 2026 BAML	A “marginal AI” baseline keeps US productivity near its 1.5% post‑2004 average and a “transformational AI” scenario adds an extra 1ppt per year to productivity beyond economists’ forecasts through and after 2027 [p.4, p.27]. AI‑related capex—especially by hyperscalers with very high capex/OCF ratios and ROIC far above WACC—is a key growth driver and supports above‑trend US GDP and EPS growth in 2025–26 [p.7, p.17]. Micro‑examples (e.g., automation of service workflows, time savings in knowledge work) illustrate the channels for AI to lift productivity and potentially ease some inflation and labor‑supply constraints [p.4, p.7, p.15].
TRowe Outlook	AI is “on track to become the biggest productivity driver since electricity,” with AI‑related capex already significantly boosting U.S. growth in 2025 and expected to remain a strong tailwind in 2026 as OBBBA’s capex incentives amplify investment in information‑processing equipment, data centers, and related infrastructure [p.3, p.6–8, p.14]. A “two‑speed” economy emerges where AI‑linked sectors are “absolutely booming” while housing and personal spending lag, and AI data‑center chip TAM is projected to grow from about USD 200 billion in 2025 to USD 1 trillion in 2030, underscoring a multi‑year capex supercycle [p.7, p.14]. AI and automation also contribute to structural labor‑market change and lower employment, complicating central‑bank trade‑offs and indirectly affecting inflation and policy [p.11].
Stifel Outlook	Hyperscaler and AI‑related capex, at the core of a fixed investment share around 19% of GDP, offset slowing personal consumption in 2025 but its rate of growth has peaked, so high but flattening AI capex levels provide less incremental lift to 2026 GDP and “won’t be enough” if consumption (68% of GDP) weakens [p.1, p.10, p.25]. The capital intensity and looming commoditization of AI erode Big Tech free cash flow and push firms toward more term debt, pressuring P/E multiples and undermining the notion of a clean, productivity‑led, non‑inflationary AI boom; long‑run productivity and price ratios such as S&P 500 vs gold and oil vs gold do not yet resemble past productivity supercycles [p.6, p.13, p.25, p.32].
UBS Year Ahead	AI‑related capex is a growing macro tailwind, with global AI infrastructure spending expected to reach about USD 571bn in 2026 and rise at a 25% CAGR to roughly USD 1.3tr annually by 2030—nearly 1% of global GDP—supporting investment and productivity [p.15–16]. Contribution of information processing equipment and software to US real GDP growth has already increased from 0.2ppt (4Q19) to 0.8ppt (2Q25), reflecting AI’s emerging impact on output [p.14]. While this capex supercycle is smaller than past mega‑infrastructure booms (1.5–4.5% of GDP), it still offers upside to growth and corporate revenues (estimated AI end‑user revenues of USD 1.5tr annually under plausible automation/value‑capture assumptions) without yet posing clear leverage or debt‑sustainability risks [p.15–16].

Regional policy divergence and multipolarity — Differing central bank paths and fiscal regimes

Source	Content
Brookfield Outlook	Monetary policy divergence is touched on via expectations of stabilizing rates and potential additional rate cuts in the U.S. and Europe, which are seen as catalysts for deal activity and refinancing [p.2, p.17–18]. On the fiscal side, industrial policies in the U.S. and Western Europe to repatriate manufacturing and support energy/infrastructure investment are highlighted [p.6, p.11–15].
Blackrock Outlook	U.S. monetary policy is expected to keep trimming rates in 2026 despite inflation staying above target, reflecting a “no hiring, no firing” labor stasis and strong AI‑investment support for growth [p.5]. Europe is shifting toward looser fiscal rules and higher defense and energy‑transition capex, with Germany suspending its debt brake, while the U.S. and UK face stretched deficits and limited fiscal space, and Japan embarks on new spending pledges [p.7, p.10]. Emerging markets, in contrast, benefit from relatively prudent fiscal and monetary frameworks, a weaker dollar and lower U.S. rates, leading to improved credit fundamentals and multiple rating upgrades [p.14].
Goldman Outlook - Summary	Growth and inflation divergence is explicitly linked to a more multipolar world with heterogeneous policy regimes, producing high dispersion in both macro outcomes and market performance across regions [p.2, p.9, p.14]. Monetary policy paths are sharply differentiated: the Fed is oriented toward a soft‑landing scenario and gradual cuts, the ECB is expected to hold rates given recent upside data, the BoE may resume cuts, the BoJ is poised to hike on persistent above‑target inflation, and several EM central banks are advancing easing cycles aided by a weaker dollar and lower oil [p.11–12, p.14, p.18]. Fiscal regimes also diverge, with Europe embracing greater fiscal flexibility and industrial policy, Japan leaning toward looser, sector‑targeted fiscal support, the US balancing expanded spending with rising debt concerns, and EMs combining reform, infrastructure outlays, and monetary easing [p.5, p.7, p.8, p.11].
Goldman Outlook	Policy trajectories diverge across regions: the Fed is poised for easing into 2026 conditional on labor weakness and anchored inflation, with end‑2026 policy‑rate scenarios ranging from 1.5–1.75% in a hard landing to 3.75–4% in re‑acceleration [p.6, p.23]. The ECB keeps rates around 2% with a bias to ease if inflation undershoots, while the BoJ is shifting toward a higher rate regime amid firm growth and inflation, and EM central banks continue easing as disinflation and a softer dollar allow [p.6, p.20, p.24]. Fiscal regimes are also diverging, with pronounced US deficits and rising interest costs, German fiscal expansion and reindustrialization, and mounting French fiscal risk all contributing to differentiated term premia and a more multipolar policy landscape [p.6, p.13, p.14, p.19, p.28].
Barclays Outlook	Policy paths diverge, with the Fed likely cutting modestly toward just above 3% by end‑2026 amid US fiscal dominance and sticky inflation, the ECB seen as more likely to cut than hike from a 2% policy rate against a weak growth/disinflation backdrop, and the BoE easing only gradually from a “high plateau” toward 3.5% by end‑2026 as UK fiscal policy tightens slightly [p.6, p.10–11, p.19]. Fiscal regimes also differ: the US runs large structural deficits with high refinancing needs, the eurozone balances German stimulus against stricter rules and political fragility (notably France/Italy), the UK pursues consolidation to plug a £30bn gap, and China deploys targeted fiscal and credit support constrained by elevated, opaque local‑government debt [p.7–9, p.11–12, p.20]. Multipolar tensions—US‑China trade frictions, tariffs, rare‑earth leverage and stronger regional blocs—feed into differing inflation, growth and rate outcomes across major economies [p.6–8, p.9–10, p.13].
HSBC Outlook	Monetary‑fiscal divergence is highlighted via a relatively hawkish Fed constrained by sticky US inflation and resilient growth versus EM central banks facing near‑record‑low inflation and high real rates, giving them scope to cut [p.5, p.23]. The US runs an expansionary, pre‑set fiscal regime (OBBBA, tax breaks), while Europe has fiscal capacity but slow deployment and is fragmented by national budget/debt concerns, and EM combines improving fiscal discipline with rating upgrades and, in some cases, new monetary frameworks (e.g., South Africa’s inflation target) [p.3–5, p.20, p.22–23]. Geopolitics and trade deals contribute to a more multipolar environment, with Asia and EM increasingly central to growth and capex themes [p.5, p.9–10, p.22].
JPAM Outlook	Policy divergence appears mainly as differing combinations of rate cuts and fiscal expansion, with markets pricing Fed and ECB policy rates at about 3.25% and 1.75% by mid‑2026 alongside substantial U.S. tax/defense stimulus, European defense and infrastructure ramp‑up, and broadly expansionary APAC fiscal settings [p.11]. Multipolar features include differentiated energy dependencies (Europe highly import‑reliant, China importing about 25% of primary energy, U.S. a net exporter), which shape regional policy priorities [p.26].
JPM Outlook	Policy divergence is discussed mainly through a U.S. lens, where the Fed leans toward a shallow easing path with measured cuts amid 3%‑ish inflation and tariff‑related upside risks, contrasting with a global backdrop in which fiscal austerity has been abandoned and government investment is structurally higher across regions [p.5–6, p.9]. While Europe and Japan are portrayed as benefiting from higher defense/infrastructure and household‑focused fiscal measures [p.5–6, p.9].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	Analysis is US‑centric, highlighting a Fed that implicitly tolerates higher inflation (rate cuts plus early end to QT despite growth above 3%) and a Trump‑era policy mix of tariffs plus investment incentives [p.9–11]. Multipolarity appears mainly through US–China trade tensions and tariff use [p.9–11].
KKR 2026 Outlook	The macro regime is explicitly asynchronous: U.S./UK/Japan combine higher trend inflation with large, ongoing fiscal deficits and easier real rates (Japan) versus Euro Area’s near‑target inflation and more constrained but rising defense/green spending, and China’s low‑inflation environment alongside large but efficiency‑challenged fiscal support [p.14–15, p.40–43, p.50–53]. This divergence feeds a multipolar macro landscape with differing monetary‑fiscal mixes and, in markets, a shift to positive stock–bond correlations and region‑specific risk premia rather than a single global cycle [p.10–12, p.27–29, p.57, p.79].
RIC 2026 BAML	A globally synchronized but uneven easing cycle—78 rate cuts worldwide in 2026 and multiple Fed cuts to a 3.00–3.25% terminal range—interacts with varied fiscal regimes [p.1, p.17]. The US leans heavily on fiscal stimulus and industrial/AI policy under OBBBA, while the EU and Japan ramp up defense and infrastructure spending and China pursues a structural rebalancing away from export‑driven overcapacity toward domestic demand [p.3, p.15, p.17]. A weaker dollar is highlighted as a potential sign of successful global rebalancing, with implications for EM and cyclicals in a more multipolar policy landscape [p.3].
TRowe Outlook	Policy trajectories diverge: the Fed may be unable to cut at all in 2026 despite late‑2025 easing because U.S. inflation stays above target amid fiscal expansion and tariffs, while the ECB could lean dovish and potentially cut again in March 2026 as eurozone growth weakens and inflation falls [p.3–5]. The BoJ remains an outlier, likely “behind the curve” and ultimately hiking more than expected as Japan exits deflation with wage‑ and fiscally driven inflation, whereas the BoE can probably ease more than priced as some fiscal consolidation follows a period of expansionary policy [p.4–5]. Many EM central banks are late in their easing cycles but still able to cut somewhat given benign inflation and healthier balance sheets, and prospective U.S. dollar weakness as the Fed’s cycle matures supports unhedged EM local‑currency bonds, highlighting an increasingly multipolar policy and FX landscape [p.4–5, p.15].
Stifel Outlook	Regional policy divergence is touched mainly via the US versus China: US macro is cushioned by a sizable 2025–26 tax‑driven fiscal impulse and a Fed likely to guide real policy rates back toward a ~1% historical median by late 2026, while China’s comparatively weak 2025 credit impulse limits the transmission of policy support to global manufacturing and US PMIs [p.4–5, p.26–27, p.37].
UBS Year Ahead	Monetary and fiscal regimes diverge regionally, with the Fed expected to hold rates around 3–3.5% by end‑2026 versus an ECB near 2.0%, reflecting slightly higher and more persistent US inflation against sub‑target Eurozone inflation and different growth profiles [p.22, p.59–60]. Europe leans more on explicit fiscal stimulus (e.g., Germany’s large infrastructure/defense package) while the US combines relatively loose fiscal policy with a focus on trade tariffs and targeted tax/deregulation shifts heading into midterms [p.22–23, p.27]. Across the US, Eurozone, and Japan, financial‑repression‑style approaches are common—large central‑bank balance sheets and regulatory channels for debt absorption—but the intensity and mix of tools vary, contributing to differing yield, FX, and policy‑rate trajectories in a more multipolar macro environment [p.36–38, p.42–43].

Defense, energy transition and industrial policy capex — Growth and fiscal effects of security/green spending

Source	Content
Brookfield Outlook	Energy transition and industrial policy capex are central: global power investment is projected at $3.3 trillion in 2025 (over 60% in renewables, storage and grid optimization), grid investment must exceed $600 billion annually by 2030, and U.S./European industrial policies are accelerating reshoring of strategic industries [p.6–7, p.11–13]. The U.S. commitment to start 10 new nuclear reactors and invest at least $80 billion with Westinghouse exemplifies security‑ and green‑linked public capex that supports growth, though its macro‑fiscal impact is not quantified [p.14].
Blackrock Outlook	Defense and security spending are set to rise, with NATO allies targeting defense outlays of 5% of GDP by 2035 and Germany suspending its debt brake to ramp up defense and infrastructure, adding a structural positive growth impulse but also increasing fiscal pressures in Europe [p.10]. Energy‑transition and industrial‑policy capex are bolstered by looser EU fiscal rules and regulatory changes aimed at shortening permitting times, supporting higher energy and infrastructure investment even as elevated public debt constrains overall fiscal space [p.7, p.10]. AI‑related data‑center energy demand—potentially 15–20% of current U.S. electricity use by 2030—interacts with these energy‑transition investments, testing power‑grid and materials capacity and shaping the scale and direction of green and industrial policy capex [p.9].
Goldman Outlook - Summary	European growth into 2026 is partly anchored in defense and industrial‑policy capex, including Germany’s relaxation of its debt brake to fund defense and infrastructure and EU‑level programs like the Clean Industrial Deal and the European Defence Industry Programme, all intended to reindustrialize and narrow the growth gap with the US [p.5, p.18]. In Japan, fiscal priorities under Takaichi include defense, nuclear energy, and advanced technologies such as AI, semiconductors, quantum computing, space, advanced medicine, and cybersecurity, which are expected to support corporate earnings and capex [p.7]. Broader global energy‑transition spending is reflected in themes like renewables, grid modernization, and data‑center‑driven utility capex, which may outpace operating cash flow and create late‑cycle risks in that sector [p.16].
Goldman Outlook	Large and rising commitments to defense and economic security—such as NATO members’ aim to reach 5% of GDP in defense spending by 2035 and the EU’s €800bn ReArm Europe Plan—are turning defense from a drag into a growth engine, notably in Germany where higher defense and infrastructure outlays are forecast to lift GDP growth to 1.4% in 2026 and 1.8% in 2027 [p.9, p.14, p.45]. Energy transition and industrial‑policy‑driven capex are likewise massive, with $12T in capital needed by 2030 and $3.3T of global energy investment announced in 2025, plus rapid growth in power demand from data centers (US share rising from 3% to an expected 8% of power consumption by 2030), creating strong demand for infrastructure and grid investment [p.9, p.37, p.45]. These spending waves support near‑term growth and reindustrialization but add to medium‑term fiscal pressures and the debate over debt sustainability and term premia [p.6, p.13, p.37, p.45].
Barclays Outlook	German fiscal plans encompass significant infrastructure and industrial‑policy spending (~€500bn to 2037, with about a fifth in 2026) and a rule that defence outlays above 1% of GDP do not count toward deficits, boosting medium‑term capex and providing some growth impulse with limited headline‑deficit impact [p.9]. Globally, a large infrastructure investment gap ($65tn needed vs $54tn projected by 2040) underscores the scope for energy transition and infrastructure spending to support growth [p.9, p.29].
HSBC Outlook	Re‑industrialisation and strategic autonomy in supply chains, advanced manufacturing and tech/defence are cited as key elements of the 2026 US capex cycle, supported by fiscal incentives like bonus depreciation [p.3, p.17–18]. Energy‑transition and climate‑related investment needs—driven by AI‑induced electricity demand, grid and storage upgrades, nuclear, and vulnerabilities around critical minerals—are identified as substantial future capex and cost centres with macro and inflation implications [p.13–14].
JPAM Outlook	Defense, energy transition, and industrial policy are central to the capex and fiscal story, with U.S. growth in 2026 boosted by OBBBA‑driven defense and critical industry investment, European debates about lifting defense spending toward 5% of GDP, and German infrastructure programs all adding to near‑term demand [p.11]. Over the medium term, energy security and decarbonization—especially in energy‑import‑dependent Europe and China—drive a long‑run capex boom in generation, grids, and related infrastructure, with OECD energy demand expected to grow 2%–4% per year into the 2040s and capex outpacing depreciation [pp.24–26].
JPM Outlook	Across regions, structurally higher government investment includes sizable European packages (around 5% of GDP in countries like Germany) earmarked for defense and infrastructure, with spending beginning in 2026 and expected to bolster domestic demand and corporate earnings, especially for domestically procured projects [p.9]. The broader shift away from post‑GFC austerity toward elevated public capex, including in energy and infrastructure, supports higher nominal growth in the Eurozone, UK, U.S., and Japan over 2022–26, though the energy‑transition angle is not detailed explicitly [p.9–10].
MS - 2026 US Equities Outlook - The Rolling Recovery Is Here	n.a.
KKR 2026 Outlook	Defense, energy transition, and industrial policy capex are key structural demand supports: Euro Area ramps defense (e.g., German defense projected at €162bn by 2029) and green spending, Japan channels supplementary budgets and ultra‑long JGB issuance into AI/semis/clean energy/defense, and China leans on green transition and industrial upgrading to offset property weakness [p.38–43, p.44–47, p.51–53]. These targeted programs raise medium‑term capex and potential growth but also entrench higher fiscal deficits and, in Europe in particular, future inflation pressures once carbon‑pricing schemes like ETS2 are fully implemented [p.40–43, p.51–53].
RIC 2026 BAML	Defense and industrial policy capex play a prominent macro role, with the EU planning defense spending of 3.5% of GDP and Japan boosting defense and infrastructure outlays alongside nuclear restarts to support nominal growth [p.3, p.15, p.17]. The US pursues rebuilding of its industrial base through commitments to advanced manufacturing, shipbuilding, and defense technology, all adding to the fiscal impulse and capex cycle in 2025–26 [p.3, p.15, p.17]. These security and industrial initiatives are central to the constructive global growth outlook and help anchor the expectation of stable GDP around 3.3% with inflation modestly above 2% [p.1–3].
TRowe Outlook	Industrial‑policy‑style spending tied to OBBBA—covering physical infrastructure, energy grids, roads, bridges, and new industrial capacity—provides a sizable 2026 fiscal boost and supports sectors such as industrials, materials, and energy, effectively functioning as a broad capex program with growth and earnings tailwinds [p.8].
Stifel Outlook	n.a.
UBS Year Ahead	Security and industrial‑policy spending is an important growth and fiscal driver, with Germany planning infrastructure and defense investment exceeding 20% of GDP, directly lifting Eurozone capex and underpinning the region’s modest growth acceleration [p.22, p.27]. Globally, energy‑transition investment reached USD 2.1tr in 2024 (+11% y/y), indicating substantial and rising green capex that supports demand and alters sectoral growth patterns [p.19]. Rising defense and green spending contribute to higher structural government outlays and debt in advanced economies, reinforcing the shift toward financial repression rather than fiscal retrenchment [p.10, p.36–37].

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