Markets bullish amid complex 2026

Lofty valuations in US, geopolitical risks and divergent policy outlooks the main factors

- Angela Tan Senior Business Correspondent

Investors in Singapore face a complex landscape in 2026 carved by significant shifts in global trade, technology and economic policies seen in 2025.

Lofty valuations in the US, simmering geopolitical risks and divergent policy outlooks in key markets suggest that the new year will have far-reaching implications for investors here.

Fund managers, analysts and economists share their views on global growth, US monetary policy and investment themes that will define the year ahead.

GLOBAL GROWTH OUTLOOK: MODEST

The global economy could gain modest momentum in 2026.

Mr Jan Hatzius, chief economist and head of Goldman Sachs Research, projects global gross domestic product (GDP) to expand 2.8 per cent in 2026, versus a consensus forecast of 2.5 per cent.

The United States economy could grow 2.6 per cent in 2026, from an estimated 2.1 per cent in 2025. It is likely to outperform because of tax cuts, easier financial conditions and a reduced drag on the economy from tariffs.

China’s GDP could expand 4.8 per cent as strong exports outweigh sluggish domestic demand. The world’s second-largest economy has shown that it has the capability to deter high tariffs on its exports, as seen in recent trade negotiations with the US.

"All these suggest that the Chinese manufacturing sector should continue to grow robustly," Mr Hatzius says.

While the worst from China’s property downturn is over, the real estate sector continues to weigh on the country's growth, he adds.

Europe continues to grapple with intense competition from China, as well as demographic decline, over-regulation and high energy costs.

Mr Hatzius predicts the euro area economy will grow 1.3 per cent, underpinned by fiscal stimulus in Germany and strong growth in Spain.