Marked by geo-economic and geopolitical headwinds, the current year 2025 is on its way out; but a plethora of challenges will continue to haunt the global economy in the upcoming year 2026.

The new year may perhaps witness a new global order characterized by tariff adjustments, regional trade deals and bilateral trade agreements. Muscle flexing by the US and retaliation by China are being keenly watched. India is negotiating a series of trade agreements including with USA and EU. What shape these deals eventually take remains to be seen.

A critical factor for the global economy will be the role of Artificial Intelligence (AI). Enormous investments have already gone into creating and adopting this disruptive technology. While tech adoption is sure to deliver benefits like quick decision making and efficiency enhancement across value chain, its downside risks are still being assessed.

Will AI turn out to be a shock absorber to save the world from the ongoing uncertainties or will it turn out to be a shock magnifier that would elevate the risks? Is a tech bubble developing? Honestly, no one has a clue and there is no certainty how it would pan out.

There is hope that in 2026, fiscal policy will remain supportive for growth. Notwithstanding the US tariff-driven disruptions we saw in 2025, fiscal policy in 2026 is most likely to take global growth upwards. Many countries are striking trade deals with the US in order to reduce the severity of US tariffs.

In terms of monetary policy, the role of the US Federal Reserve has always been crucial for keeping inflation on leash. Interest rates and their movements have a bearing on economic performance and inflation. It will also have an impact on the US dollar.

After three rate cuts in recent months, and given the current state of the US economy in terms of jobs and inflation, there is expectation the Fed rate cuts in 2026 will be moderate and that the next cut may come only in the second quarter. Central bankers in other countries are likely to watch the US Fed and follow suit.

Another key theme for 2026 is that the US economic exceptionalism may continue. The US is the world’s engine of economic growth with GDP value at $ 25 Trillion. Despite global headwinds buffeting economies, the US has remained resilient in 2025. This exceptional performance may continue into 2026.

In the upcoming year, energy products will deliver a big relief to consuming nations. Crude oil market is likely to remain weak at least in the first two quarters because of oversupply situation. Broadly speaking, Brent will hover around the $ 60 a barrel mark with a $ 2 movement either way, but with a downward bias. This is sure to help countries contain energy inflation.

Economists are coming around to a consensus that on current reckoning, global growth may be in the vicinity of 3 percent. While the US is projected to register a growth slightly in excess of 2 percent, the world’s second largest economy China ($ 19 Trillion) may see a growth of around 4.5 percent.

Overall, 2026 is going to be an interesting year with growth opportunities despite challenges. Global commodity markets are bracing themselves to usher in the new year. Investors are working on rebalancing their portfolio. Metal markets will attract a lot of attention.