The US economy remains the primary engine of growth, supported by robust consumer spending and continued strong investment, particularly in artificial intelligence (AI) and technology. In Europe, the picture is considerably weaker, due to higher energy prices and the limited impact of stimulus measures. China continues to grow, albeit at a slower pace than in previous years. Supported by strong earnings growth and widespread optimism around AI, financial markets performed notably well in the first half of 2026.
"}},{"componentType":"sectionTitle","title":"Growth holds up, but uncertainty has increased"},{"componentType":"paragraph","richBody":{"value":"Our baseline scenario for this year remains largely intact. The global economy continues to expand, but at a relatively modest pace. Higher energy prices, rising inflation and increasing interest rates are weighing on growth. We have slightly lowered our global growth forecast from +3.2% to 3.1%.
In the US, growth is expected to pick up slightly this year to just above 2%. This is higher than we anticipated at the end of last year, but lower than the upwardly revised expectations earlier this year. The US economy continues to be supported by investment, a solid labour market and consumer spending. In Europe, growth is lagging and the risk of a short, technical recession has not disappeared. Structural factors such as low productivity growth and increasing international competition are weighing on growth potential. We have therefore lowered our growth forecast for 2026 from just above 1% to 0.3%.
The escalation in the Middle East represents an important new source of uncertainty. Higher energy prices are feeding through into lower purchasing power and higher costs for companies. This is dampening economic growth, particularly in energy-dependent regions such as Europe. For now, the impact remains contained, but vulnerability in the growth outlook has increased.
"}},{"componentType":"sectionTitle","title":"Disinflation trend interrupted"},{"componentType":"paragraph","richBody":{"value":"The trend of declining inflation seen in recent years has reversed in recent months. Higher oil and gas prices are translating into increased energy, transport and production costs, feeding into broader inflation. This effect is most visible in Europe, but inflationary pressures are rising globally as well. The longer energy prices remain elevated, the greater the risk of second-round effects.
For central banks, this means there is currently little room to cut interest rates. A number of central banks, the ECB included, have already raised policy rates. As inflation (expectations) have increased, interest rates have risen globally. Central banks are expected to remain cautious, and financial conditions are likely to ease less quickly than previously anticipated.
"}},{"componentType":"sectionTitle","title":"Greater role for geopolitics"},{"componentType":"paragraph","richBody":{"value":"With rising geopolitical tensions, alternative scenarios are becoming more prominent. In our baseline scenario, economic growth remains moderate, inflation fluctuates around target levels but is more sensitive to energy prices, and central banks remain cautious in cutting rates. We now expect some central banks in developed markets to implement additional rate hikes.
In a positive scenario, an acceleration in productivity growth, for example driven by AI, could lead to stronger earnings growth, possibly accompanied by higher interest rates. In a negative scenario, further escalation in the Middle East could push energy prices higher. This would result in a combination of weaker growth and persistently higher inflation, with rising interest rates and increased pressure on financial markets.
"}},{"componentType":"sectionTitle","title":"Conclusion: predictability is declining"},{"componentType":"paragraph","richBody":{"value":"The global economy remains resilient, but uncertainty has increased. Higher energy prices and a less clear inflation trend are limiting the scope for central banks and creating a less predictable environment. For investors, the outlook remains moderately positive, but less straightforward than in previous years. In this context, selection, quality and risk management are becoming increasingly important in delivering returns. More on this can be found in our outlook for equities and bonds.
"}},{"componentType":"linkList","iconTitle":{"title":"Read more"},"textLinks":[{"text":"Midyear outlook 2026: Homepage","url":"/en/personal/investing/market-news-and-views/investment-outlook-2026-home"},{"text":"Midyear outlook 2026: Opportunities","url":"/en/personal/investing/market-news-and-views/investment-outlook-2026-opportunities"},{"text":"Midyear outlook 2026: Risks","url":"/en/personal/investing/market-news-and-views/investment-outlook-2026-risks"},{"text":"Midyear Outlook 2026: download PDF","url":"https://assets.ing.com/m/7dfc82cb56e72468/original/Investment-Outlook-2026.pdf"}]},{"componentType":"sectionTitle","title":"Good to know"},{"componentType":"paragraph","richBody":{"value":"Growth and inflation estimates are calculated by ING Research and can be adjusted on a regular basis.
Investing involves risks and costs. The value of your investment may fluctuate. Past performance is no guarantee of future results. Read more about the risks of investing.
This publication has been prepared on behalf of ING Bank N.V. and is intended for information purposes only. ING Bank N.V. obtains its information from sources deemed reliable and has taken the utmost care to ensure that the information on which it based its views in this publication was not incorrect or misleading at the time of publication. ING Bank N.V. does not guarantee that the information it uses is accurate or complete. The information contained in this publication may be changed without any form of announcement. Copyright and data file protection rights apply to this publication. Data from this publication may be reproduced provided that the source is stated. ING Bank N.V. has its registered office in Amsterdam, commercial register no. 33031431, and is regulated by the Dutch central bank De Nederlandsche Bank (DNB) and the Netherlands Authority for the Financial Markets (AFM). ING Bank N.V. is part of ING Groep N.V.
"}}]},"hasMacro":false,"id":"3201e5b5-8db3-4503-a9a3-c79da93bbff4","localeString":"en-GB","mainHeaderZone":{"backLink":{"textLink":{"text":"Market news and views","url":"/en/personal/investing/market-news-and-views"}},"componentType":"productHeader","coreHeader":{"body":"So far this year, the global economy has proven more resilient than previously feared. Despite geopolitical tensions, including the war in the Middle East, a global recession has been avoided. We expect a slight slowdown in economic growth, while inflationary pressures are unlikely to ease for the time being.","headerImage":{"extension":"jpg","original":"https://assets.ing.com/asset/a402d61d-1600-4031-8808-1d170816e384/Holiday-Campaign-2026.jpg","transformBaseUrl":"https://assets.ing.com/transform/a402d61d-1600-4031-8808-1d170816e384/Holiday-Campaign-2026","type":"image","width":3200},"subtitle":"Growth remains resilient, but predictability declines","title":"Mid-Year Outlook 2026: Economy"}},"publishDate":"2026-06-25T12:47:17.735+02:00"}}