The global economy is expected to heat up in 2026 thanks to multiple factors including newly-emerged sectors in China, yet risks remain due to unstable geopolitical situations, said an economist with global financial institution UBS.
UBS recently predicted the global economy could expand by around 3 percent in 2026, surpassing its 2025 forecast.
Arend Kapteyn, the global head of economics and strategy research and chief economist at UBS, said in an interview with China Global Television Network (CGTN) that the optimism comes from positive trends in global credit and countries’ stimulus policies.
"We're seeing credit globally basically start to pick up slowly, so that's sort of more supportive. And then we have fiscal stimulus in some of the major economies. That combined is sort of enough to give us a bit more growth momentum in 2026," he said.
UBS released its annual outlook at a conference in Shanghai on Tuesday, striking an optimistic note on both equities and growth. It expects momentum in China's equity market to continue into 2026, forecasting A-share company profits to rise by eight percent in 2026 and the country's economy to expand by 4.5 percent.
Kapteyn said China’s new quality productive forces, including AI and other high-tech sectors, are expected to help drive that momentum.
"What is interesting is that China has all these new economy sectors now, and those sectors are now contributing more than the property market by our estimate. And so China really looks like it's at the forefront of implementing a lot of these new technologies, and so that is something that, although you might not see it so much in the aggregate economic numbers, you will see it in the equity market. So I think increasingly investors want to be exposed to the Chinese equity market because it gives you an alternative to the U.S. market. It's basically the other big market where you have AI exposure," he said.
Despite the overall positive forecast, Kapteyn warned that uncertainty from U.S. policies could pose risks to global economic performance.
"One feature of 2025 is that uncertainty really spiked in the first half of the year. So we had the tariffs, but not just the tariffs, we had many other things happening and global confidence basically collapsed. That was particularly extreme in the U.S. The risk is that we get more of the same, that we basically get you more policy erraticness out of the U.S. or renew tariffs or whatever it is, and then you perpetuate this environment of uncertainty. And that would really be, I think, a risk to the outlook because implicitly, we never assume these risks are going to keep [existing], these events are going to keep happening so that would be the thing I'm sort of most worried about – could the U.S. be again a source of disruption?" he said.
Global economy shows positive momentum for 2026, though risks linger: UBS economist
Global economy shows positive momentum for 2026, though risks linger: UBS economist
