Global Economic Outlook 2026

Table 1 presents the latest real GDP growth projections for selected regions, comparing the Interim Economic Outlook figures against December's forecast. Global growth is expected to moderate, with the world economy projected to expand by 2.9% in 2026 before recovering slightly to 3.0% in 2027 — both figures revised downward from earlier estimates.

Source: Testing Resilience March 2026, OECD Economic Outlook, Interim Report

China's real GDP growth rate remains substantially higher than that of developed economies, projected at 4.4% in 2026 and 4.3% in 2027, compared to just 0.8% and 1.2% for the Euro area, and 2.0% and 1.7% for the United States over the same period. However, China's growth trajectory continues its gradual deceleration from the stronger pace seen in the 2010s, confirming the long-anticipated convergence toward OECD levels. I expect this convergence trend to persist over the coming decades, though China will likely maintain a meaningful growth premium over developed markets for the foreseeable future.

Consequently, a nominal terminal growth rate of 3% continues to be appropriate for the valuation of Chinese EV manufacturers, as China's domestic market remains the primary battleground for these vehicles. This rate is deliberately conservative — below both the global average and China's near-term projected growth — reflecting several persistent uncertainties.

Domestic consumption remains subdued, and the real estate sector continues to pose a significant drag on China's economy. Intensifying price competition in the EV sector itself has compressed margins across the industry, adding a sector-specific headwind. Additionally, geopolitical tensions have deepened: China's position on the Russia-Ukraine conflict continues to strain its relationships with Western economies, while escalating trade measures — including tariffs on Chinese EVs imposed by the EU and the United States — directly threaten export-led growth strategies for Chinese automakers. These factors collectively justify maintaining a cautious terminal growth assumption despite China's continued outperformance relative to developed markets.