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Global Economics Intelligence executive
summary, January 2026
February 24, 2026 | Article
A
By Arvind Govindarajan , Shubham Singhal , and Sven Smit
with Je"rey Condon and Krzysztof Kwiatkowski
Overall global economic sentiment is improving, with businesses more
positive about future growth in line with the IMF’s upward growth revisions;
several central banks cut interest rates in December.
fter a year dominated by concerns over trade and global turbulence, businesses are entering
2026 with more optimism—despite continued uncertainty. Indeed, business sentiment was more
buoyant in the #nal quarter of 2025 than in previous quarters, according to the recent McKinsey Global
Survey on economic conditions.
Executives were more upbeat about future economic expectations than they had been in previous
2025 surveys, with respondents expressing the brightest near-term expectations of the year—this in
comparison with three previous quarters of largely negative assessments of current global economic
and trade conditions (Exhibit 1). Moreover, for the #rst time in 2025, the survey recorded more
respondents predicting improvement over the following six months versus those expecting worsening
conditions.
Exhibit 1
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Notably, survey respondents no longer see changes in trade policy as the foremost disruptor of
business, although this remains a signi#cant concern. Instead, they point to geopolitical instability as
the principal risk. Investment in AI and gen AI continues to be the most reported high priority for
business leaders to address, particularly in technology, media, and telecommunications and in service
industries.
There is further optimism in the IMF’s January 2026 World Economic Outlook update: The IMF is
projecting global growth at 3.3% for 2026 and 3.2% for the following year, a slight upward revision
from the October 2025 update (Exhibit 2). It says that technology investment, #scal and monetary
support, accommodative #nancial conditions, and private sector adaptability have helped to o"set
trade policy shifts. At the same time, it warns that policymakers should restore #scal bu"ers, preserve
price and #nancial stability, reduce uncertainty, and implement structural reforms.
Exhibit 2
Executives’ views on the global economy improved throughout the year,
ending with more respondents expecting conditions to improve.
Global economic condition, expected next 6 months, % of respondents
Worse The same Better
Q1 2025 Q2 2025 Q3 2025 Q4 2025
53 53 46 46 43 43
32 32
19 19
23 23 24 24
26 26
29 29 3131 33 33
4141
Note: Figures may not sum to 100%, because of rounding.
Source: McKinsey Global Surveys on economic conditions (Feb 26–Mar 7, 2025, n = 988; May 29–June 6, n = 898; Aug 27–Sept 5, n = 799; Nov 24–
Dec 5, n = 1,011)
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Looking back on 2025, we see that the year was one of mixed fortunes for economies around the
world. The US economy grew strongly in 2025, with real GDP accelerating through midyear on higher
consumer spending and exports. GDP for the third quarter of 2025 rose by 4.3% (annual rate) versus
3.8% in the second quarter. The real GDP increase re$ected higher consumer spending, exports, and
government expenditure that were partly o"set by a decrease in investment. Meanwhile, the Chinese
economy grew by approximately 5.0% in 2025, and India expanded by some 6.5% on an annual basis
on the back of resilient services activity and domestic demand. By contrast, eurozone growth is
expected to be 1.4% in 2025, while UK real GDP expanded in November, driven primarily by a rebound
in production sectors, but remains modest.
In the US, consumer sentiment is trending down, dropping to 89.1 in December from November’s
revised #gure of 92.9. Nevertheless, November’s retail and food services sales (adjusted for seasonal
variation and holiday and trading-day di"erences) were $735.9 billion, up 0.6% from October’s revised
$731.4 billion. Overall, retail sales continue to grow across most countries, with some acceleration
observed in November and December due to the holiday season.
Against this backdrop, central banks have been cutting interest rates to stimulate their economy, where
they feel they have room for maneuver. Although central banks in Brazil, China, and the eurozone
refrained from cutting rates, other major central banks delivered 25-basis-point cuts in December.
Looking at prices, we see that in$ation across developed economies remained broadly stable in
December. Among the emerging economies, in$ation in India and China picked up from near zero,
while in Brazil and Russia it continued to decelerate. Overall in$ation expectations have been
oscillating around 2.2%.
In the US, in December, median in$ation expectations increased at the one-year-ahead horizon, to
3.4% (from 3.2%), but remained steady at the three-year-ahead and #ve-year-ahead horizons—both at
The IMF is projecting global growth at 3.3 percent for 2026 and 3.2 percent
for 2027, a slight upward revision from the October 2025 update.
International Monetary Fund (IMF) Q1 2026 forecast for real GDP growth, International Monetary Fund (IMF) Q1 2026 forecast for real GDP growth, International Monetary Fund (IMF) Q1 2026 forecast for real GDP growth, International Monetary Fund (IMF) Q1 2026 forecast for real GDP growth, %
India India
2027 2026
China China
2027 2026
Brazil Brazil
2027 2026
US US
2027 2026
UK UK
2027 2026
Eurozone Eurozone
2027 2026
Russia Russia
2027 2026
World World
2027 2026
6.2 6.2 6.4 6.4
4.2 4.2 4.0 4.0
1.9 1.9
2.3 2.3 2.4 2.4
2.0 2.0
1.3 1.3 1.5 1.5
1.11.1 1.4 1.4
1.0 1.0 1.0 1.0
3.3 3.3 3.2 3.2
Source: International Monetary Fund; Global Economics Intelligence by McKinsey
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3.0%. The consumer price index (CPI) increased 2.7% year over year in December—the same pace as
November—while core in$ation was slightly up, to 2.6% (annualized). Among other developed
economies, eurozone in$ation is lower, with the headline #gure projected to decrease from 2.1% in
2025 to 1.9% in 2026 and 1.8% in 2027, before rising to 2.0% in 2028, mainly owing to energy
in$ation. Meanwhile, UK CPI ticked up to 3.2% in December, while core in$ation was slightly higher at
3.3%, indicating that underlying pressures have moderated from postpandemic peaks but are not yet
fully contained.
Among the emerging economies, the picture is also mixed. In China and India, in$ation is low or
negative. Consumer prices in China continued their recovery to 0.8% in December (0.7% in November),
while core CPI was unchanged at 1.2%. De$ation in producer prices continued to ease slightly to –1.9%
in December, from –2.2% in November. In India, CPI in$ation was recorded at 1.33% year on year in
December 2025 (provisional), while food in$ation remained in contraction at –2.71% year on year.
However, it’s a di"erent story in Russia, where tight monetary policy is still required to achieve the
Central Bank of Russia’s in$ation target of 4%. Recently, in$ation has slowed to 7% in November and
6% in December but a rise in VAT and regulated prices for municipal services will create upward
pressure and has already started to boost expectations. In Brazil, in$ation is more modest, touching
4.26% in December (versus 4.46% in November) and coming in below the central bank’s upper target
limit of 4.50% for a second consecutive month. Mexico’s annual in$ation declined to 3.7% in
December, down from 3.8% in November, reinforcing the ongoing disin$ationary trend.
On the commodities markets, gold exceeded $5,000 per ounce—a level never seen before—before
cooling somewhat. At the same time, oil prices have eased as supply increased and demand remained
broadly stable, with only modest growth expected in 2026. Food prices have also eased, driven mainly
by dairy prices, which declined on seasonal increases in cream and milk availability.
Both manufacturing and services indicators ended the year on a weaker note, as growth rates of new
orders and output eased. Manufacturing sectors around the world are either contracting or slowing
down; companies do not see growth in new orders or employment, while stocks of purchases are
declining. In parallel, services growth eased across most countries at the end of 2025. However,
companies remain positive about 2026.
The US industrial production index decreased slightly to 102.3 in December. Similarly, S&P’s
Manufacturing PMI fell to 51.8 in December 2025 (52.2 in November), the lowest in #ve months.
However, in the eurozone, despite a marginal decline in the Economic Sentiment Indicator and the
composite PMI at the end of 2025, the industrial production index is gradually improving. In India,
business surveys pointed to continued expansion but moderating momentum as 2025 ended. The
HSBC India Manufacturing PMI eased from 56.6 in November to 55.0 in December (still comfortably in
expansion), indicating growth but at a slower pace amid competitive pressures and softer sales in some
categories. In Brazil, manufacturing production has dropped: The monthly Industrial Production Index
(IPI) decreased from 113.04 in October to 103.4 in November (although still above the neutral 100 line).
The Mexico Manufacturing PMI fell from 47.3 in November to 46.1 in December, signaling a further
deterioration in operating conditions.
On the services front, the US services PMI edged down to 52.5 (54.1 in November). Services activity in
India also cooled but remained strong: The HSBC India Services PMI was at an 11-month low of 58.0 in
December (down from November’s 59.8) as new business growth softened, while export demand held
up better. Brazil’s Monthly Services Survey (PMS) revenue index slid slightly to 127.7 in November from
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128.7 in October (staying above the neutral 100 line). This was mirrored in the volume index, which
declined to 111.1 (from 112.8).
US total nonfarm payroll employment increased in December (+50,000) but has shown little change
since April. The unemployment rate remained at 4.4%. Across the pond, the number of paid employees
in the UK has been trending lower since 2024, while unemployment has remained broadly stable at
5.1%, with a renewed rise among workers aged over 50. In China, the overall surveyed urban
unemployment rate stuck at 5.1% for a third consecutive month. The youth unemployment rate eased
slightly to 16.5% in December (16.9% in November). Labor market conditions displayed mixed signals in
Mexico. The unemployment rate rose to 2.7% in November, up from 2.6% in October. At the same time,
formal employment reached a record high, with 22.8 million registered jobs in November.
Equity markets globally started 2026 on a strong note, with indexes rising and reaching record highs in
most economies. The cost of capital moved sideways in January.
Export growth strengthened across most major economies through October 2025, while import growth
was mixed over this period. Total seaborne volumes softened into November, while container
throughput cooled after midyear strength. Logistics conditions remained broadly normal in November,
with a modest uptick in global supply chain stress in December. Inbound spot freight rates also ticked
up in December but remained well below mid-2025 highs. Outbound freight rates to Shanghai eased
after June’s spike and stabilized into year-end.
In the US, the monthly de#cit fell by 39.0% to $29.4 billion in October. Exports reached $302.0 billion,
$7.8 billion more than in September, while October imports reached $331.4 billion, $11.0 billion less
than in September. In China, cross-border trade (imports and exports) experienced a year-on-year
growth rate of 6.2% in December, a rebound from the 4.3% increase seen the previous month. Export
growth accelerated to 6.6% in December, from 5.9% in November, while imports also witnessed a
recovery to 5.7% from November’s 1.9%. Mexico posted a trade surplus of US $663 million in
November, as imports declined slightly more than exports, resulting in a positive balance despite a
broad monthly contraction in trade $ows.
A bold new book from the McKinsey Global Institute supports an optimistic view of progress and
economic development over the coming decades. A Century of Plenty: A Story of Progress for
Generations to Come (McKinsey Global Institute, January 2026) imagines a world in which every
person enjoys at least Switzerland’s standards of living today—a hypothesis that the authors stress
tested and concluded is physically possible.
McKinsey’s Global Economics Intelligence (GEI) provides macroeconomic data and analysis of the
world economy. Each monthly release includes an executive summary on global critical trends and
risks, as well as focused insights on the latest national and regional developments. View the full report
for January 2026 here. Detailed visualized data for the global economy, with focused reports on
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ABOUT THE AUTHOR(S)
The data and analysis in McKinsey’s Global Economics Intelligence are developed by Arvind Govindarajan ,
a partner in McKinsey’s Boston o%ce; Shubham Singhal , a senior partner in the Detroit o%ce; Sven Smit,
a senior partner emeritus and senior adviser in the Amsterdam o%ce; Je!rey Condon, a senior knowledge
expert in the Atlanta o%ce; and Krzysztof Kwiatkowski, a capabilities and insights expert in the Boston
o%ce.
The authors wish to thank Nick de Cent, as well as Alejandro Morales, Beatriz Oliveira, Darien Ghersinich,
Erik Rong, Frances Matamoros, Gabriel Marini, José Álvares, Roman Büschgens, Sebastian Vargas, Tomasz
Mataczynski, Valeria Valverde, and Vanshika Tandon for their contributions to this article.
The invasion of Ukraine continues to have deep human, as well as social and economic, impact across
countries and sectors. The implications of the invasion are rapidly evolving and are inherently uncertain. As
a result, this document and the data and analysis it sets out should be treated as a best-e!orts perspective
at a speci"c point in time, which seeks to help inform discussion and decisions taken by leaders of relevant
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