The major economies’ prospects in 2026

AS THE year begins, the world’s three biggest economies are performing very differently. Whereas the US is roaring ahead, the European Union appears to be stuck in a low-growth equilibrium, and China is experiencing unbalanced growth.

While the challenges these economies face differ markedly, they have one thing in common: economic policy has little influence on their prospects.

In China, growth is being driven largely by a massive trade surplus, which surpassed US$1 trillion in 2025. Over the last decade, Chinese leaders have often emphasised the importance of stimulating domestic consumption – an effort that would shrink this surplus. But consumption’s share of Chinese gross domestic product remains stubbornly low, and if Japan’s experience is any guide, this is unlikely to change in the foreseeable future.