Financial Forecasts February: 2026, better than expected

In 2025, all economies will have been close to their potential growth, and the year will ultimately be "a tale told by an idiot, full of sound and fury, signifying nothing" and we had to revise upward our forecasts more than once.However, we quickly transitioned from Macbeth to Pirates of the Caribbean if not Age Ice.… In any case, the American "Imperial Republic" of R. Aron seems to be back, and geopolitical tremors are sure to follow. After Europe, Latin America, and the Middle East, Asia might join the dissonant chorus of nations this year.For 2026, in any case, US GDP growth should exceed 2% thanks to fiscal support, falling rates, and a tariff shock that is now behind us. While tariffs remain Trump's massive negotiating weapon, they could even decrease as in 2025 (ultimately 17%) with multiple exemptions and the need to restore purchasing power to households that are losing it with rising rates. The 30-year rate is currently 90 basis points higher than before the Fed cut rates by 175 basis points.Europe will also be close to its potential, with a German engine(1.5 times larger than France economy, second) joining those of Southern Europe and growth likely above 1%. Here too, tariffs did not prevent a 2% increase in EU exports to the US, although the shock is severe for some sectors: -41% in wine sales, and the automotive sector at its lowest in 70 years in the UK…Although China is supposedly the main target of the trade war, it is currently the winner (its trade surplus reached a record high of 1.2 trillion in 2025, and its growth rate remained at 5%, as in 2024). However, it is expected to gradually slow down. Its economy is still driven by exports, and consumption and the real estate sector are not picking up. However, the demographic shift is already underway (600 million Chinese by 2100 according to the UN). This shift has begun with an acceleration in population decline, with 3.4 million fewer people in 2025 compared to 2.2 million and 2 million lost in the 2 previous years, and a fertility rate now standing at 0.98.Japan will continue to be in the spotlight amid the JPY, the Nikkei, and the post-election policy mix. India has been little affected by the 50% tariffs, with growth above 7%, and could benefit from the agreement with the EU (1/4 of global GDP and population between the 2nd and 4th largest economies in the world) and eventually lower US tariffs.