• TD Securities forecasts global GDP growth will ease to 2.8% in 2026, down from an estimated 3.0% in 2025.
  • The slowdown is attributed to persistent core inflation, lingering trade-policy volatility from 2025, and ongoing geopolitical risks.
  • The deceleration is uneven, with the Eurozone facing the most pronounced challenges while the U.S. and China show relative resilience.

Global economic momentum is poised to moderate next year as a confluence of stubborn inflation, policy aftershocks, and geopolitical friction weigh on expansion. According to a new forecast from TD Securities, global GDP growth is expected to ease to 2.8% in 2026, a step down from the 3.0% projected for 2025.

This projection, shared with Roic AI, points to a world economy losing steam despite anticipated central bank easing. The analysts cite three primary drags: geopolitical risks that continue to cloud investment decisions, core inflation that remains persistently above targets in key economies, and the lingering effects of what they describe as significant trade-policy volatility expected in 2025.

“We’re looking at a world where the easy gains from post-pandemic reopening are fully exhausted, and structural headwinds are reasserting themselves,” said one economist familiar with the report. The forecast anticipates U.S. inflation will stay above the Federal Reserve's 2% target for a sixth consecutive year in 2026, complicating the policy landscape even as the Fed is expected to cut rates more than previously anticipated, potentially bringing them down to around 3% by year-end.

The slowdown, however, won’t be felt equally. Regional divergences are stark. The Eurozone is expected to bear the brunt, with growth forecast at a moderate 1.1% in 2026, as German fiscal support is partially offset by consolidation in France and Italy. In contrast, the United States is projected to see relatively modest growth in the 1.8% to 2.0% range, though some analysts suggest it could still outperform consensus expectations. China’s economy, meanwhile, is forecast to expand by 5% in 2026, bolstered by front-loaded government stimulus, though this is expected to fade thereafter.

A significant wild card remains the “lingering effects of 2025 trade-policy volatility,” as the TD report puts it. The implication is that tariff implementations and negotiations next year will create uncertainty that spills over, dampening business investment and trade flows well into 2026. This comes as monetary policy globally is shifting; the European Central Bank, for instance, is forecast to implement two rate cuts in 2026, bringing its key rate down to 1.5% by mid-year.

Market implications are already being penciled in by some strategists. The outlook anticipates a further decline in 10-year Treasury yields and a depreciation of the U.S. dollar in 2026, reflecting what one source called “reduced U.S. exceptionalism” in the growth narrative. This environment could support a rotation from momentum-driven trades into value-oriented assets.

Efforts to reach TD Securities for additional comment were not immediately successful. The firm’s report outlines several scenarios, including a demand-driven upside where U.S. investment surges, or a mild recession risk triggered by a greater-than-expected slowdown from monetary policy lags and trade restrictions. For now, the baseline is a world economy shifting into a lower, but still positive, gear.