The latest data seem to confirm that global GDP growth slowed in Q4. But there are also several signs of encouragement, consistent with our forecast for global growth to stabilise at about 3% this year. Business surveys perked up in January, the AI buildout continues to buoy world trade, and lower interest rates are supporting stronger credit growth and goods consumption. Moreover, while our estimate of economic activity in China weakened in December, its labour market looks to be on the mend coming into 2026. Meanwhile, labour markets in most advanced economies continue to cool. This should bear down on wage growth and ultimately services inflation, with most central banks continuing to cut interest rates. The most prominent exception is Japan, where rising services inflation is setting the stage for higher interest rates.
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