Oxford Economics - World GDP: Forecast Revisions

Kiran Ahmed, Oxford Economics

By Kiran Ahmed, Oxford Economics

We forecast world GDP will expand by 2.5% in 2026, slightly weaker than this year's 2.7% gain. Global trade is expected to remain soft as higher US tariffs take effect, and the lagged consequences of heightened uncertainty are likely to suppress investment. Although recent US labour data have been worse than projected, we don't believe this weakness signals an impending US recession.

Although global activity in H1 was remarkably resilient, our world business cycle indicator signals momentum slowed during H1 this year. The fall in global trade has been limited but will intensify now that frontloading of orders has run its course and exporters to the US face higher tariff rates and compliance costs.

At the same time, the solid performance of business investment in H1 doesn't necessarily indicate that firms are shrugging off uncertainty. Usually, uncertainty can weigh on capital spending with a lag of six to nine months, implying that US tariff developments are only now beginning to influence investment spending.

This aligns with a further loss of growth momentum. However, we believe neither the US nor the global economy are on the brink of recession. The AI boom in the US is expected to further boost domestic investment and drive demand for Asian-produced semiconductors. The delayed effects of previous policy rate cuts, a moderately favourable fiscal backdrop, and healthy household balance sheets should prevent prolonged contractions in activity.

We think the recent weakness of US non-farm payrolls will prompt the Federal Reserve to bring forward the next phase of the cutting cycle to September from December. Still, we're sceptical that this marks the beginning of a major US labour market downturn. We continue to expect US GDP will expand by 2% in 2026.

Global Valve & Actuator Market Outlook

The Global Valve and Actuator Market Outlook 2024 is the eighth annual market report prepared by Oxford Economics, one of the world’s foremost independent global economic forecasting firms. The report is commissioned by the British Valve and Actuator Association.

In October, the report is published with updated and revised data sets. BVAA members can use the online Power BI data tool, a business analytics platform developed by Microsoft, permitting easy visualisation of the data.

If you are a BVAA member, you can access the 2024 report and Power BI data tool, via the Member Area of our website here: https://www.bvaa.org.uk/login-here.asp

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Kiran Ahmed, from Oxford Economics, will be discussing the latest: Global Valve and Actuator Market Outlook 2025 at the BVAA's Annual Meetings taking place on Thursday 20th November at Aldwark Manor Estate. Click HERE for further information, or contact sophie@bvaa.org.uk. 

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