The global economy has demonstrated remarkable resilience despite major trade disruptions, geopolitical tensions and energy shocks over the past two years. Strong investment in artificial intelligence (AI), adjustments in global supply chains and government policy responses have helped prevent a broader economic downturn. Although several risks remain, economic growth is expected to recover in 2027 as inflation gradually declines.
Global growth remains resilient
International Monetary Fund (IMF) data shows that global growth reached 3.5% in both 2024 and 2025, despite US President Donald Trump’s sweeping tariffs and the subsequent Iran War. Economic expansion is projected to slow to 3% in 2026 before recovering to 3.4% next year, with inflation returning towards its 2025 level. Several factors have supported this resilience, including market pressure that prompted Washington to moderate its trade policies.
Average US tariffs have consequently fallen from their April 2025 peak of 21.5% to approximately 9.6%. Changes in production, diversified energy supplies and strategic oil reserve releases have further softened economic disruptions. Fiscal and monetary policy adjustments also provided support, while substantial AI investment, particularly in the US and China, continues driving long-term productivity expectations.
Risks threaten 2027 recovery
Despite the relatively positive outlook, persistent geopolitical tensions could undermine economic stability. Renewed oil prices above $100 per barrel, shipping restrictions around the Strait of Hormuz and escalating regional conflicts threaten additional inflationary pressure. Political uncertainty, rising sovereign debt and elevated bond yields present further challenges for governments and central banks. Meanwhile, concerns surrounding a potential AI investment bubble could trigger market corrections, weaker consumption and credit problems.
Additional interest rate increases may also restrict economic activity as policymakers balance inflation control against financial stability. Nevertheless, the baseline scenario remains favourable, supported by technological investment and potential geopolitical de-escalation. Sustained productivity gains and lower energy prices could allow global markets to maintain their recent positive momentum through 2027.
