The impulse from these forces is expected to be front-loaded in the first half of 2026, and the rebound from the US government shutdown will also provide a boost. \u201cWe expect especially strong GDP growth in the first half of next year,\u201d Hatzius writes.<\/p>\n
However, while global GDP is rising, it hasn\u2019t resulted in stronger performance from the labor market. Job growth across all major developed-market economies has now fallen well below the rates prevailing in 2019, just prior to the pandemic.<\/p>\n
\u00a0<\/p>\n
Although it doesn\u2019t provide the full explanation, the job-market weakness mirrors the sharp downturn in immigration and, in turn, labor force growth, Hatzius writes. The disconnect in employment is most pronounced in the US, where job growth may well have been negative over the summer.<\/p>\n
The impact of artificial intelligence (AI) on jobs and productivity, meanwhile, has so far mainly been confined to the technology sector, according to Goldman Sachs Research. Our economists expect that the largest productivity benefits from AI are still a few years off.<\/p>\n
The outlook for China\u2019s economy in 2026<\/p>\n
The narrative for China\u2019s economy is much more mixed. China\u2019s ability to produce\u00a0increasingly higher quality goods\u00a0at lower prices remains unmatched, Hatzius writes. The world\u2019s second-largest economy has demonstrated that it has the capability to deter high tariffs on its exports, as seen in recent trade negotiations with the US.<\/p>\n
\u201cAll this suggests that the Chinese manufacturing sector should continue to grow robustly,\u201d Hatzius writes.<\/p>\n
At the same time, large parts of China\u2019s domestic economy remain weak. While the largest drag on GDP growth from the property downturn has probably already taken place (property sales are down 60% and property starts are down 80% from the peak), our economists estimate that the property sector will produce a 1.5 percentage point drag on GDP growth next year.\u00a0<\/p>\n
\u201cThe combination of a strong manufacturing sector and weak domestic demand is pushing China\u2019s current account surplus ever higher,\u201d Hatzius writes.\u00a0<\/p>\n
Our economists expect its current account surplus to increase to almost 1% of global GDP over the next 3-5 years, the biggest surplus of any country in recorded history. \u201cThis is likely to\u00a0weigh heavily on growth\u00a0in economies that compete intensively with China such as the euro area, and\u00a0particularly Germany,\u201d Hatzius adds.<\/p>\n","protected":false},"excerpt":{"rendered":"The impulse from these forces is expected to be front-loaded in the first half of 2026, and the…\n","protected":false},"author":2,"featured_media":359998,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164,14271,172177],"class_list":{"0":"post-359997","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-economy","8":"tag-au","9":"tag-australia","10":"tag-business","11":"tag-economy","12":"tag-macroeconomics","13":"tag-outlooks"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/359997","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=359997"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/359997\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/359998"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=359997"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=359997"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=359997"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}