Despite tremendous geopolitical risks, continuing solid growth is expected for the global economy in 2026.
In its economic outlook for the current year, Munich Re expects real GDP growth of 2.7%, similar to the previous year and in line with the average for the past 10 years.
However, the reinsurer cautioned that the downside risks clearly outweigh the potential for higher growth. Geopolitical risks and the high level of uncertainty surrounding US economic and trade policy are expected to take center stage throughout the year.
Munich Re global chief economist Michael Menhart said the global economy in 2026 will face challenging conditions that would have been hard to imagine just a few years ago. "In 2025, the global economy proved to be more resilient than anticipated, and I expect this to continue in the current year,” he said.
In many major economies, growth will likely be supported by fiscal policy stimuli in 2026. More expansionary monetary policies by many central banks should also have a positive effect, particularly on investment demand.
Differences in growth between major economic areas persist, with robust growth expected in the US, but only moderate growth in Europe.
Specifically, real GDP growth in the US is likely to be 2.4%, supported by strong investment in technology and artificial intelligence.
However, private consumption in the US is becoming increasingly divided, as wealthier households increase spending while lower-income households struggle with persistently high prices exacerbated by import tariffs.
The inflation rate in the US remains above 2.5% and is not expected to fall significantly in 2026 due to high service sector costs.
Conversely, economic growth in the eurozone is expected to be slightly lower at 1.1%, hampered by structural challenges. After three years of recession and stagnation, Germany, the largest economy in the eurozone, will likely rebound to a small plus of just under 1%, chiefly due to fiscal policy stimuli.
Among the large eurozone member states, Spain will remain the country with the highest economic growth in 2026, due in part to its being less dependent on international trade.
This outlook aligns with the company's long-term strategy, particularly its recently unveiled roadmap where low cat losses and strong P&C margins underpin Munich Re's 'Ambition 2030' plan.
In China, economic growth is expected to slow to around 4.5% in 2026, dropping below the previous year’s level and well below the 10-year average. A recovery is expected for investments in the manufacturing sector in view of the new five-year plan, but growth dynamics in private consumption will remain moderate.
Inflation in China is expected to remain very low in 2026, driven by weak consumer demand and overproduction in the industrial sector.
Producer prices in China have been falling for years, which helps keep global goods prices down but increases competitive pressure on manufacturing industries in regions like Europe.
Overall, Munich Re warns that downside risks outweigh potential upside scenarios across the globe. Abrupt political decisions or an overvaluation of technology shares could impact the global economy, though a further acceleration of the AI boom could provide a surprise boost.
