The latest global economic outlook for 2026 from the World Bank. Learn about economic trends, policies, GDP growth, risks, and inflation rates affecting the world economy, stability, and development.

Experts responding to the CfM-NIESR survey believe that the economic costs of persistent US geopolitical threats are either moderate or large

The debate about the economic consequences of Russia’s invasion of Ukraine has focused on supply-side concerns such as soaring energy prices and severed supply chains. However, this overlooks the role of the financial sector. Using granular transaction data, this column shows that the outbreak of war acted as a ‘silent monetary tightening’. Exposed banks faced immediate higher funding costs and reduced credit supply, an effect equivalent to a policy rate hike of nearly 60 basis points, well before the ECB acted. Geopolitical tensions appear to influence both the stance and the effectiveness of monetary policy more directly and powerfully than previously assumed.

On The Business Briefing, Dr Yueh joins Janet Alvarez to unpack Greenland, tariffs and why markets are still on edge

Artificial intelligence is spreading quickly among European firms. Using new surveys from Germany, Italy, and Spain, this column shows that adoption rates of generative AI differ sharply across and within countries. Uptake is strongly skewed towards larger, more productive, service sector firms, while German manufacturing shows substantial adoption too. There are strong complementarities between AI, cloud computing, and robotics, and early experimentation appears to be an important stepping stone towards more intensive use. Most adopters still use AI experimentally and mainly to upgrade automated or business support processes, and tend to see AI as reshaping tasks while hardly affecting overall employment.

Political information campaigns that perform well in focus groups and pilot studies may backfire when applied at scale. This column uses a field experiment in the 2023 presidential election in Argentina to demonstrate how a campaign can affect voters through both direct and indirect channels. A small but significant share of voters disagreed with an information leaflet about an outsider candidate. These outraged voters were more active in communicating with their social networks than voters who agreed with the campaign message, creating a net result that was the opposite of the campaign’s intended impact.

It has been argued that ‘connector’ countries can benefit from trade tensions by bridging the gap between trade blocs. This column examines trade flows of six Asian emerging markets from 2018 to 2022, distinguishing between trade reallocation and rerouting. While the impact of US–China trade tensions on most of these countries is unclear, Vietnam appears to have experienced trade reallocation rather than trade rerouting, supported by rising domestic production and stronger inward FDI. Despite potential short-term gains, trade reallocation increases connector countries’ vulnerability to geoeconomic fragmentation, with losses for all countries in the long run.

Reducing supply dependencies and vulnerabilities is now a cornerstone of economic policy. This column analyses how French manufacturing firms used inventories and diversified their country-specific supply risks between 2012 and 2023. The use of these strategies varies widely across firms, even within industries. Inventories and diversification are substitutes: firms that diversify more tend to stockpile less, suggesting that inventories act as a buffer when firms are unable to reduce risk through diversification. It matters for assessing trade vulnerabilities: products sourced from few countries may appear exposed to risk, yet in practice they are often imported by firms holding large stocks.

Public debt-to-GDP ratios have risen substantially over the past 25 years, and multiple spending pressures threaten to increase them further. This column outlines the lessons learned from episodes of successful debt reduction in OECD countries since the late 1970s. Sustained primary budget surpluses have been a key driver of declining debt ratios, reflecting favourable cyclical conditions coupled with consolidation efforts that have changed the composition of the public finances. Expenditure restraint has curbed subsidies and moderated the upward trend in pension outlays, while largely sparing healthcare and education. Corporate, but not personal, income tax revenues have strongly increased.

A growing body of evidence shows that rising inflows of immigrants and refugees can trigger political backlash. This column examines how local economic and cultural factors shaped responses to refugee inflows in Italy during the 2014–2017 crisis. Backlash was stronger in wealthier areas and in communities with denser within-group ties. Refugee resettlement in more culturally integrated areas significantly lowered support for anti-immigration parties. Refugee reception policies must move beyond numerical fairness and consider the socio-cultural characteristics of host communities.

Borrower-based macroprudential measures are meant to provide a guardrail to counter an erosion of lending standards over time. This column explores whether such measures can contribute to more resilient bank profitability by mitigating the effects of higher interest rates on bank loan loss provisions. Higher interest rates are found to lead to larger loan loss provisions, especially for banks offering flexible-rate loans, but this effect is attenuated when borrower-based measures have been tight in preceding years. Tighter macroprudential settings also reduce the effect of higher unemployment on loan loss provisions, and thereby the negative impact of unemployment on bank profitability and stability.

Recent shifts in the geopolitical order have created an urgent need for Europe to strengthen its strategic autonomy. This column discusses the economic security issues raised by services trade in the EU. These stem from insufficient market integration due to physical infrastructure constraints, regulatory barriers, and inadequate financial support. To tackle these, the authors call for a common industrial policy for services to boost competitiveness. This includes building an effective savings and investment union, coordinated public procurement, and an EU-scale financial services industry, including the digital euro.

Dr Linda Yueh CBE appointed as Chair of The Royal Parks

Work from home has boomed since the Covid pandemic. This column uses a vignette experiment to explore how working from home links to gendered attitudes about household work and childcare in Netherlands. When presented with various routine and emergency chores, survey respondents agree, on average, that the partner working from home should execute them. The extent of agreement is significantly larger when the vignette randomly depicts a man, rather than a woman, working from home, indicating that work from home may blast rather than boost gender norms around household work and childcare.