The global economy is proving more resilient than expected despite persistent tensions over trade and policy uncertainty, according to the World Bank. It lifted its forecast for global GDP growth to 2.6% in 2026 and 2.7% in 2027, from the 2.4% and 2.6% respectively it predicted in June.
The upgrade in its latest Global Economic Prospects report was partly driven by better-than-expected growth in the US. However, while nearly 90% of advanced economies have recovered to above pre-pandemic per capita income levels, more than a quarter of emerging and developing economies are poorer than they were in 2019, the report said.
Around the world
Gold and silver hit record highs last week amid a backdrop of concerns over the US Federal Reserve’s autonomy, geopolitical tensions and benign US inflation data.
The yellow metal, often regarded as a ‘safe haven’ in volatile periods, broke above the $4,600-per-ounce mark early in the week.
US year-on-year inflation was unchanged at 2.7% in December, in line with market expectations, raising hopes of interest rate cuts later this year.
Elsewhere, the UK’s FTSE 100 and Japan’s Nikkei 225 indices reached record highs. Japan’s stock market rallied amid expectations of a snap election in February that could lead to further fiscal stimulus from the government.
Figure in focus: 1973
Coal-fuelled power generation fell in China and India last year, marking the first simultaneous drop since 1973, a new Carbon Brief analysis found.
Electricity generation using coal dropped by 3% in India and by 1.6% in China as both countries added record amounts of clean energy sources. This is significant as China and India’s power sectors drove 93% of the rise in global carbon dioxide emissions between 2015 and 2024, Carbon Brief said.
Meanwhile, US coal power generation rose by 13% last year, contributing to a 2.4% rise in US greenhouse gas emissions, due to higher natural gas prices and growing power demand, according to a separate report from Rhodium Group.
Chart of the week – shifting AI growth
The rally in technology stocks – in the US and beyond – was driven less by the companies developing the core artificial intelligence technologies themselves and more by the ‘picks and shovels’ firms, i.e., the suppliers of the essential infrastructure and tools supporting AI growth. They include semiconductor manufacturers, hardware providers, and providers of cloud computing platforms. They are all expected to benefit from the increasing capital expenditure associated with AI development.
Words of wisdom
Global Cooperation Barometer: Created by the World Economic Forum with McKinsey & Company, this tracks 41 indicators of global cooperation across five pillars: trade and capital; innovation and technology; climate and natural capital; health and wellness; and peace and security.
The most recent report, which combines both 2024 and 2025 findings, showed that overall, cooperation held steady, but its composition is evolving as “smaller and more adaptive cooperative coalitions are emerging.”
There was greater cooperation across innovation and technology and climate and natural capital. However, cooperation in trade and capital flattened and continued to decrease in peace and security, as conflicts escalated.
What’s coming up?
Monday sees the Eurozone and Canada reporting inflation numbers, while China issues fourth-quarter economic growth data.
On Tuesday and Wednesday, the UK updates markets respectively with its latest unemployment and inflation reports.
The US posts its final Q3 economic growth estimate on Thursday, while the Bank of Japan holds its first monetary policy meeting of the year on Friday.
Several purchasing managers’ indices are released on Friday, including those covering Japan, the Eurozone, the US and the UK.
The World Economic Forum’s annual meeting in Davos runs from Monday to Friday where leaders will convene to discuss critical global challenges under the theme of A Spirit of Dialogue.
