QNB forecast a slight improvement in global growth in 2026, amid stability in major economies, projecting a rate of 3.2 percent, which is slightly higher than overall forecasts.
The bank’s weekly report said that this growth rate points to a modest acceleration in activity, although it remains below long-term growth trends, which are more balanced and convergent rates.
The report discussed the key factors shaping growth prospects in the three largest economies which together account for nearly 60 percent of the global economy. It expected US economic growth to remain strong, supported by robust household consumer spending and investment flows.
In this context, the report noted that consumption is benefiting from the strength of household balance sheets, which are in their strongest financial position in decades, in addition to low unemployment rates.
It said that the boom in artificial intelligence is stimulating investment flows and is expected to increase productivity through the adoption of new technologies. Moreover, the Federal Reserve is continuing a major shift in its policy as it moves from tightening toward neutrality.
The report projected that the federal funds rate would be cut to 3.5 percent by the end of 2026, which would help support investment and consumption growth by making credit cheaper, increasing the attractiveness of new business activity, and reducing the opportunity cost of spending. This could lead to a slight acceleration in US economic growth to around 2.2 percent in 2026.
As for the Chinese economy, the report discussed the possibility of a slight slowdown in growth. However, strong export performance, domestic demand, and rising productivity are expected collectively to support growth of around 5 percent, which is the target rate the government is expected to adopt.
The report noted that despite significant uncertainty surrounding trade policy and the higher tariffs imposed by the United States in 2025, China’s trade surplus exceeded one trillion US dollars for the first time last year.
In this regard, it highlighted that the roughly 30 percent year-on-year decline in Chinese exports to the United States by the end of 2025 was offset by the flexibility of companies that successfully redirected their shipments toward alternative markets.
The report added that the Chinese economy continues its transition from exporting simple consumer goods to manufacturing advanced technology and high-value-added products, a process that is moving China to the top of global supply chains and contributing to higher productivity growth. In addition, domestic consumption is expected to remain supported by fiscal policy, along with further gradual monetary easing, strengthening the favorable factors underpinning moderately positive outlooks for 2026.
As for the Euro area, the bank projected a slight acceleration in economic growth, supported by fiscal spending and a less restrictive monetary policy for activity. It noted that spending under the European Union’s Next Generation EU (NGEU) program contributed about 0.5 percentage points to overall growth in 2025 and could continue to support growth in 2026 if it remains on track.
In addition, the Russia-Ukraine war triggered defense spending initiatives estimated to increase GDP by more than 1 percent in over 16 countries that applied to benefit from coordinated flexibility under the EU’s fiscal rules.
The report pointed out that monetary policy has become more accommodative, as the European Central Bank cut its benchmark interest rate by 200 basis points from a highly restrictive level of 4 percent in mid-2024 to 2 percent by June of last year.
It said it expects the interest rate cut to stimulate real private-sector credit growth, noting that economic indicators showed a clear improvement in the services sector, which entered an expansion phase during the last four months of 2025.
QNB’s weekly report concluded by noting that since the services sector accounts for about 70 percent of the euro area economy, this was an encouraging sign for the region, which is expected to achieve growth of 1.5 percent in 2026, higher than previous forecasts.
