The global economy enters 2026 in reasonable shape, but geopolitical risks have returned to the forefront. Energy disruption from the Middle East highlights uneven regional resilience, with the US more insulated than Europe. As global fragmentation increases and the AI theme broadens beyond hardware, selectivity, diversification and resilience focused strategies are increasingly important.

We see a global economy still growing, but unevenly. AI continues to drive US strength, though concentration and valuations raise risks. Fiscal policy is supporting activity, while geopolitics and inflation add uncertainty. In this environment, diversification, alternatives and active management are essential for resilience.

We are cautiously optimistic on the global economic outlook shaped by central bank policy shifts, inflation moderation and geopolitical realignments. The Federal Reserve’s recent rate cut has prompted a more constructive stance on risk assets, particularly equities, with earnings resilience expected to drive returns. Inflation remains above target, but is no longer seen as a major threat to the Fed’s easing cycle.

Overall, while risks remain – from labour market deterioration to geopolitical tensions – the policy backdrop and earnings resilience support selective risk-taking and diversified positioning.