Analysis by UK investment firm Schroders sees a continued favourable backdrop for the global economy, with global GDP growth still expected to expand by around 2.5 per cent in 2026 and 2.6 per cent in 2027.
The Schroders global forecast remains broadly unchanged, with inflation expected at 3.3 per cent in 2026 before easing to 2.7 per cent in 2027. Persistent domestic price pressures have led the manager to raise its US inflation forecast, while inflation in Japan is expected to remain above the Bank of Japan’s target.
In the eurozone, resilient activity and sticky services inflation have increased the risk of second-round effects, whereas greater labour market slack should limit those pressures in the UK for now, claims Schroders.
China remains the exception, with weak domestic demand containing inflation at home even as higher producer prices could spill into global goods prices.
In the US, doubts have arisen about the Federal Reserve’s commitment to returning inflation to target, but this was ascribed by Schroders to oblique messaging by a Chair (Kevin Warsh) reluctant to provide forward guidance.
David Rees, head of global economics at Schroders, says: “Having brushed off the Iran shock, we continue to believe that the global economy will deliver solid growth and that inflation is the bigger concern. Accordingly, rather than recession, the biggest threat to risk assets is that question marks over central bank credibility cause long term yields to surge higher.”
Earlier this month, Schroders received regulatory approval for the firm’s first tokenised share class of a US dollar money market fund. The asset manager secured approval from the Central Bank of Ireland to launch this fund with a tokenised share class.