📈 Global Growth Projected at 2.6% for 2026 amid Oil Price Risks

Fitch Ratings forecasts a steady but slightly slower global economic expansion for 2026, revised upward to 2.6% from previous estimates. While the world economy remains resilient against geopolitical shocks, growth is heavily contingent on the duration of current oil price volatility. • Global Outlook: World growth reached 2.7% in 2025. The 2026 forecast of 2.6% assumes the recent jump in oil prices is short-lived, with Brent crude averaging US$ 70 per barrel. • Major Economies: • USA: GDP growth is projected at 2.2%. Gains in AI-related investment and fiscal deficits are offsetting higher tariffs, though cooling labor markets may trigger two Fed rate cuts. • China: Expected to slow to 4.3% (from 5% in 2025) due to weakening consumer spending and exports. • Eurozone: Growth remains steady at 1.3%, supported by a recovery in Germany despite energy price headwinds. • Risk Factors: An adverse scenario with oil at US$ 100/barrel could slash global GDP by 0.4% and spike inflation by up to 1.5% in Western markets. • Trade & Tech: Global trade volume rose in 2025, driven by high import intensity in the ICT/BPM and semiconductor sectors required for AI infrastructure. Context for Sri Lanka: As a net oil importer, Sri Lanka's recovery remains sensitive to these global energy price fluctuations and the projected slowdown in key export markets like the US and China.