Goldman Sachs: The global economy is expected to grow 2.8% next year, and the Federal Reserve is expected to cut interest rates by 50 basis points

The Zhitong Finance App learned that Goldman Sachs released a research report stating that the global economy is expected to grow steadily by 2.8% in 2026, which is higher than the 2.5% expected by the market. Among them, the US economy grew by 2.6%, based on reduced tariff drag, tax reduction measures, and a more relaxed financial environment. Meanwhile, China's economy is expected to remain resilient, growing 4.8% year on year, and strong export performance will offset the impact of weak domestic demand. Despite long-term challenges, the bank's forecast for the Eurozone next year is still relatively optimistic. The economy is expected to grow by 1.3%, mainly based on Germany's fiscal stimulus and Spain's strong growth.

However, the bank believes that the labor market outlook is less optimistic. Due to the accelerated increase in productivity, the GDP growth threshold required to create jobs has been raised. This is particularly evident in the US. Although GDP growth is steady, the unemployment rate is still on the rise. In terms of inflation, the bank expects inflation in most economies to fall back to close to target levels by the end of 2026. In the US and the UK, core inflation is expected to slow from about 3% to close to 2%, as the impact of tariff transfers and administrative prices weakens, while wage and housing inflation slows down. Falling oil prices, increased supply of Chinese commodities, and accelerated productivity growth should also help curb inflation.

In terms of interest, the bank expects the US Federal Reserve to cut interest rates by 50 basis points to 3% to 3.25%, and there is a dovish risk. The bank expects that the UK and many emerging markets will also cut interest rates, particularly Brazil and Central and Eastern Europe, Middle East and Africa (CEEMEA). Among them, the UK may cut interest rates by 75 basis points. As for the Eurozone, the bank is expected to keep interest rates unchanged and does not agree with changes in market pricing expectations for interest rate hikes in Canada and Australia.

In terms of assets, the bank has a positive view of stocks and many emerging market assets. It believes that the cyclical background will dominate the market and overwhelm valuation concerns, but the tension between the two may increase volatility, and the market is more concerned about the trend of re-leveraging, which may lead to poor credit performance.

The bank believes that the key risk is that a weak labor market may raise concerns about a recession, or that the stock market may question the value of AI-related income. Under these circumstances, allocating assets linked to short-term US interest rates should be defensive. At the same time, the bank believes that the US dollar will gradually weaken unless stronger US growth causes the market to lower expectations of interest rate cuts, but the decline may be more concentrated on cyclic-sensitive currencies.