Inflation, debt, fragmentation and technological disruption are converging to create the most complex economic environment in decades.
Join leading economists to decode the economic landscape in the year ahead.
This session contributes to the ongoing work of the Centre for the New Economy and Society.
At Davos, four chief economists argued that 2026 will feel like “driving with one foot on the gas and one foot on the brake”: better sentiment than 2025, but with new structural constraints. Shen Jianguang emphasized resilience despite fragmentation: global trade hit “record high” amid tariff wars, China still delivered 5% growth with exports contributing roughly 30%, and emerging Asia led (Vietnam ~8%, India ~7%). Yet China’s core challenge is rebalancing from “export driven economy to domestic driven economy,” shifting from investment to consumption and from goods to services.
Nela Richardson described a U.S. labor market that looks strong in aggregate but is “k-shaped, concentrated and choppy.” Hiring is dominated by healthcare and leisure/hospitality, while manufacturing is “at a virtual recession,” and small businesses face structural—not cyclical—headwinds from trade policy, demographics, and AI.
Gilles Moëc flagged credit as the top risk: widening public investment needs and persistent long-end rates point to “structurally higher interest rates,” with Japan as a “canary in the coal mine.” On AI, Richardson downplayed a bubble—“AI…can deliver”—but warned infrastructure and skilled-trades shortages could bottleneck data-center buildouts. The panel highlighted Africa’s demographic rise and digital infrastructure (e.g., Nigeria’s fiber rollout) as pivotal to the next globalization, increasingly “about people” and skills.
Thank you so much for attending this briefing on the Chief Economist, briefing on what to expect in 2026. My name is Karen Harris. I'm Bain and company's managing director of Macro Trends. I'm joined by our esteemed panelist, Shen Jing Wang, who is vice president and chief economist from JD.com. Nela Richardson, who is chief economist and environmental, social and governance officer from ADP USA, and Gilles Moec, who is the chief economist from AXA investments in the UK. For those of you who are joining us live stream and wish to share some of your thoughts, we'd appreciate using the hashtag 26. If you want to look genius, use f 25 and predict last year perfectly, but f 26 is more current. In any case, we appreciate your being here for what I think was a very interesting and pivotal year of reflection in 2025. We saw both the reversal of many secular trends that had driven the global economy. Most importantly, I think we'll look at 25 as the year we moved from globalization to post globalization. And we also saw the end of or possibly moving to the end of an economic cycle that was characterized by issues that sent people scrambling for the boardroom every year, from Covid to supply chain to Russia's invasion of Ukraine to tariffs. And so the question is, with this intersection of this secular shifts, the the economic cycle ending and the introduction of foundational technologies like AI, like blockchain, what is the outlook? Well, the chief economist said about 53% tilt toward the negative. So that's better than last year, which was 72% negative. But in many respects, sounds like an economy that's driving with one foot on the gas and one foot on the brake. And so I'm going to ask the panelists some of their views on what might be creating that interesting tension. I'm going to start with you, Shengqiang, because for those of you who don't know, to my left is someone who speaks Chinese, Finnish, English, has worked for the Finnish central Bank, now is the economist for one of the most important technologies on the planet, and spent time at some second rate institutions in Boston as and working for the IMF. So I don't know that anyone's better served to give us that overview. And I guess I'll start with tariffs were supposed to destroy the global economy and particularly the US economy. Why didn't that happen? And what does that mean for this year?
Yeah, I think the first thing is, you know, the global economy is much more resilient than expected. You know, we see despite all the tariff war, you know, the global trade reached record high. And and no one can expect in the beginning of last year that Chinese growth still can reach 5% growth, driven mainly by exports, 30% contribution by exports. Right. So yeah, that's also a lot of things that are beyond, you know, this expectation. And also, you know, we are seeing very strong stock market performance across the globe. And also eight over 8% growth in Vietnam, for example, and over 7% growth in India. And that's why in our report, you can see, you know, chief economist still expect top performer, you know, South Asia and East Asia and China in this year. Actually people worry about growth in in Europe actually. And interestingly and also people worried the chief economist worried about AI risks. You know, that's also in line with the what IMF you know, what income outlook just said yesterday. So they also worry about even also IMF also upgraded global forecasts, economic forecasts, but also they their main concern is whether this AI, you know, disruption or AI bubble burst will be a key risk to the world. Just as you mentioned. There's also the same concern last year, right. But it hasn't materialized. So I found it's, as you mentioned perfectly, there are two sided story. On the one hand, they're very resilient. You know, even the global trade, as I mentioned, reached a record high despite all the, you know, trade war issues. And but secondly, there is, you know, this lot still a lot of concern for bubble, for example, for China, as you mentioned, there's tradable but export performing so well driven actually by productivity growth, by the technology progress. Right. We see all this new technology, this new energy EV cars. No one can expect. The Chinese companies exported 8 million cars last year. Right. So driven by EV boom. And but of course for China there is a lot of challenges. Main challenge is the domestic demand how to boost consumption, how to, you know, engineer a path, a switch from export driven economy to domestic driven economy. That's still a lot of challenges. So to summarize that the global economy has a lot of risks, but so far we are seeing very resilient, you know, development in the global side.
Thank you. So Neela, we all may remember that last fall we had a government shutdown and had no official government data. It seems a long time ago in today's world. But ADP was the flashlight in the cave of that data free time. And while the the US has looked robust at a top line, you've revealed some concerns about fragility. And I and I'd love to hear your point of view on where the US economy is based on what you're seeing on the ground.
Thank you for that, Karen. So ADP, for those of you who don't know, is a payroll company. We pay about one fifth of the private sector. That's 26 million workers in the US. And we provide that data now weekly. So you can have a real time measurement. And the reason why is because of all the global trends that you're seeing, whether it's trade policy or AI or demographics, it's hitting businesses, especially small businesses who are price takers in this market disproportionately. And it's changing hiring behavior. And we can see that in real time. So as resilient as the global economy is, as resilient as the US economy is underneath that surface, at the granular level, you're seeing the cracks. And so if I could characterize the labor market in the US in three words, I would call it k-shaped concentrated and choppy. So I'm going to go through those very quickly. K-shaped. It's been defined as a k-shaped economy, where the top 20% of consumers, by income, are driving a lot of consumer spending in the US and around the world. Well, you can see that reflected in hiring patterns. This is a heavily concentrated market for hiring. There are two sectors who are really driving hiring in the United States. It is health care, which is an expensive service for most consumers, and leisure and hospitality, which is certainly a discretionary service for all consumers. So you can see how that k-shaped spending impacts the labor market. That means that manufacturing is at a virtual recession that we've seen, choppiness in professional business services, that even in a time where we were expecting a lot of financial mergers and acquisitions activity, again, that sector has been choppy. Firms are taking this all in. They're trying to figure out what is their best strategy. And if you're a small business and remember, three and four US workers work for a company that is a small business. You're not just looking at your consumer demand anymore. You have to look at the world. You have to look at your supply chain. You have to look at trade and tariff policy. You have to look at your aging demographic, and you have to have an eye towards AI. So it's a very different hiring pattern in the United States. And we've seen and it's actually growing at half the rate at which it did before the pandemic. And so I'd like to close this opening remark by saying this is structural. It's not cyclical. So that is very important to keep in mind. These are structural long term shifts and hiring patterns. And so there's no short term easy solution to them.
All right. So we've talked about the AI bubble. We've touched on it a little bit. But in the report Jill. There's also concern about a credit bubble. It's one of the top concerns actually of The Economist. So I'd love to hear your point of view on on what the implications are of are we do we have a credit bubble and what are some of the implications of that.
Yeah. Thanks a lot. Because, yes, the report in general was not suggesting a very high level of alarm, I would say in the economist community. But still, as you say, that came out as the number one risk. And, I would like to start with some very, trivial comments on, on public finances first. Obviously, I don't need to elaborate much on the fiscal trajectory in the US at the time of the big beautiful budget bill, the CBO was predicting a deficit of between 6 and 8% of GDP for for the coming years. On the other side of the Atlantic in Europe, Germany has discovered its inner French and has decided to finally, spend some, some money. And we could end up, actually, by the end of next year as having Germany and France having more or less the same deficit level. And this is obviously because of the need to spend more on infrastructure, which is good. Also the need to spend more on on defense, which given the situation is also probably more than than necessary. And I would even add that in China, if you rebuild, actually the entire balance sheet of the general government, public debt is probably at around 100% of GDP. So that is that is well known. But I think that we have just now, as we speak, a canary in the coal mine and the canary in the coal mine could be Japan. I think it's a very interesting situation over there. It's a situation where, thanks to the reawakening of nominal GDP growth, public debt was falling. I've been falling over the years, one of the very few cases. But we know we now have, inflation back. We have probably another fiscal push, and we can see long term interest rates rising very, very fast in, in Japan. And that gets me to my final point, which is, what will happen in the private sector because, yes, risk free interest rates are on the long end of the curve, did not respond that much to the cuts by central banks. But at the same time, the spread on corporate lending was very, very tight. However, we now need to take into account the fact that a lot of companies will be faced with massive investment needs in the years ahead. The tech industry is moving from a situation where they were massively using retained earnings to pay for the investment, to a situation where they're actually issuing debt. I'm not saying that this is unsustainable. Their debt level remains very, very low, but it simply adds to the need to fund an awful lot of new, arrays of spending, both in the private and in the public sector. So among those risks, I actually agree with the consensus of my of my colleagues in thinking that this is definitely an area we need to monitor in 26.
So just to dig in a little bit there, if you think about the the needs for capital from data centers and AI, energy transition or more energy, the the either or or and energy strategies that are being taken in different parts of the world. And the lack of reaction on the long end of the curve. Do you think that that puts us into a world of structurally higher interest rates looking over the next few years?
Yeah, that would be that would be my my view. And, I have not had this view all the time. I was one of the proverbial French doves. But it's true that we are currently dealing with what I think is probably an expansion, an upward revision in what is probably. I don't know if the concept really exists, but other neutral long term interest rate, when you think of the simply the array of new, investment needs, with a level of savings, which may actually start declining depending on what, aging finally does to saving patterns. We have theories on that. It has never really been tested. Will we be able to count forever on the kind of savings ratios that we've had from elderly people the last few decades? Maybe. But again, it's never been tested.
So if we think about a world that has all this, the demand for infrastructure, a lot of the fundamentals from that on the energy side, also in AI are coming from, from where you are now in Hong Kong and in China. And yet at the same time, we hear a lot of stories about the or narratives about the Chinese economy, that it's got headwinds from the need to increase consumer spend, from the debt, as you said. How does how do non-Chinese companies, how should they or, or actors look at the Chinese economy and understand that balance or tension between those two?
Yeah, I think this morning the Chinese vice Premier, actually. Mr.. He gave a speech and listened very, very interesting, very nice. And actually, he mentioned that the two things first is that there is a switch from China from investment not to consumption, and also from goods consumption to service consumption. Here specifically mentioned that China has accumulated, like I think, 15 trillion US dollar trade on imports of of but mainly it's China is deficit in in service trade. So so there's a lot of need. And also he mentioned also China strive to open further. So so I think that's but actually he mentioned about the you mentioned about the investment. But actually Mr.. Mentioned that China has already invested so heavily in green energy. Now China has the the largest, you know, this green energy facility in the world producing all kinds of, you know, energy using this, this new type of technology. And also the EV car, for example, is another example. So that's I think is very interesting that it's probably the opposite, that China is actually is in need of, more consumption instead of investment. And also regarding supply side versus demand side, it's more demand side these days. It's not just supply. We know that China you know, for example, you know, industry supply chain development infrastructure is is so heavily invested already. And it's also providing a lot of, you know, boost to the economy. But right now because of changing world, everyone is facing a new, new environment. As the president of the European Union this morning also listened very interestingly. He said, if the world has the model has changed, Europe has to adapt. They have to face maybe some permanent change. A very, very interesting phenomenon is that the the global change. Right. But the Chinese model, you know, supply driven, investment driven model will give way to domestic demand driven and consumption driven model. But whether China can succeed in this transition, I don't think it's only matter for China, but also for the rest of the world.
Speaking of China, last year we had the deep sea moment, right? That sense of my goodness are all the is all this investment in AI going to have the ROI that investors expect? And nila, I wondered what your point of view is. Is this how pernicious is this bubble and what would be the ideal? What would be the for the for the vitality of the US economy? How would you like to see that resolved?
I think the investment, whether or not we're in an investment bubble, will be decided by the capital markets. I kind of think it's a bit hyped. We're not in a bubble. I think AI, as promised, can deliver, higher standards of living, higher growth rates, and help solve the most challenging human conundrums on the planet. However, it's going to take an infrastructure that is able to keep up with the development. And right now we don't have it. And this is where people meet the technology, because that infrastructure and why it's sometimes viewed as a circular investment boom, because AI is investing in AI right now. You need people to build data centers, but you don't need people to run data centers. And so public support for resource intensive builds like data centers may not be there in the same way that factories were going into a community. Also, we have this demographic population, structural change around the world. The US is 25%, roughly of global GDP, 5% of the working population of the of the, of the world. And yet in our most important data, center fields, HVAC professionals, plumbers and electricians, the average age of an HVAC professional is actually going down. Why? Because everybody's retiring. And this is a sophisticated skill set. You need to build a data center. 1 or 2 degrees of temperature affects efficiency. And if you are plumbing data at scale, if you are pumping the water in that kind of resource intensive way, you need sophisticated builders. And we lack them in the United States, and we lack them around the world. And if you look at China or Europe, they're actually on the same population trajectory as the United States. Europe is about ten years ahead. We're getting older. And where is the young workforce coming in? Well, three fourths of that growth over the next 50 years is coming from Africa. It's coming from Southeast Asia. So is the skills and the capital deployed in the places where the labor are going? And do we have the people to build the technology now? So while the productivity boom, I think is here and will be embedded, the investment boom may not be able to keep up or may outpace our ability to build the infrastructure around it because of people and skills.
So, Jill, you have, you sit in a region where, well, we have different challenges to that. We've heard from the panelists. Nila is highlighting this investment boom may not be able to keep up. I think Europe might want to swap challenges, with that particular one. What's your outlook for that European model and what can be done to improve productivity there?
Yeah, definitely. I think we have several solutions to, to explore. One is that, okay, even if we have actually some players, in it, some players on, on AI, we're not in the leading, seat there. That's that's clear. So the next race for us is in terms of, the speed of adoption of the technologies, and I think we can actually do a much better on this. It might be that the speed of adoption is linked to the overall flexibility of your economy. And, I would suggest that the level of flexibility in the European economy at this stage has not yet reached its sufficient level. So that's one adoption. Second, there is however, very clear awareness of, our, our lagging behind on, on key infrastructure. And again, I would like to, to talk about, Germany because I don't think we talk enough about what's going on there. It's a massive change. It's even a cultural change, not just an economic one for a country to decide that they're going to spend 10% of GDP on infra over the next ten years, that can actually change the way we look at Europe in ten years time. So I know that Europe is good at asking patients from the rest of the world. But this is decided. This is not a plan. And this has, by the way, not much to do with the EU. It's a decision by a national government to actually embrace a new form of managing its economy.
Thank you. We have lots of questions up here, but I do want to give our audience in the room an opportunity to ask the questions that they might have. So, please, put your hand up and one of my colleagues will come with a microphone. We've left them stunned and speechless. There we go. Fantastic. Thank you.
Hello. My name is Rashid. I represent a company called Cadence Construction. And, it's related to your last point about the capability to actually execute on the scale of infrastructure that we need for the age, and proposing Africa potentially as a source of the talent. And as you rightly admit, the training and skills are not there. This is a space I'm working in now where we are taking young people to train them in construction. Admittedly, it is just for the traditional method now, but in the time to come, they first need this understanding of how things work today. And then we can layer on the complexities that we need for the age. I don't know if anybody can comment on how do we then transition from building the capability in Africa, and then using that as a base to serve the world? In this regard?
I'd like to take a crack at it, and then I'll leave it to our panelists. I think, and I did even three years ago before the, the rollout of ChatGPT that he workers are the new globalization. As economists, we're trained to think about globalization in terms of trade and services. But it's really now about people, even small firms are hiring around the world, and it's not hiring on who's got the lowest wages. It's who's got the best talent. And how can I source that? Talent and talent has never been so readily available to even small firms. And that's what gets me excited about Africa. It gets me excited about that world, because the skills are transferable, and skills can be learned in a way that they couldn't ten, 20 years ago. So it's about, investing in that skills. And I think the demographics of the advanced economies are going to mandate that they look outside their own borders for skill development. So, the structure is pointing towards Africa, it's pointing towards Southeast Asia in a way that it hasn't historically. And I think that's a a way to marry the technology and AI with the people demographics that we're seeing in a really exciting new way.
What are countries like you mentioned? Vietnam, what are they doing or what did China do that might be instructive as other countries try to create that global, service force.
Yeah. You know, we the global supply chain changing, right. The Chinese company now actually investing heavily now in Vietnam, Mexico, in Africa, and also the trade and investment flow between China. And those economies are growing so fast. One thing I want to give you data. You know, that the biggest market for Chinese exports, actually, I sum up, actually Latin America, Africa and India actually become the largest destination for Chinese exports. Just the you cannot imagine that can happen already ten years ago, but it's already happened. Right. So so that's and also the Chinese investment in, in in Southeast Asia, you know, in Africa it's also rising very rapidly. So so I think this kind of, you know, you know, change in the global trade and investment flow, it's just it's up to Africa maybe to Southeast Asian country to, you know, adopt a policy that is conducive for this capital to flow in and to build factories, you know, to, to, you know, to train the workers. You know, I think that could also I think the good thing is to to of Chinese FDI of other countries, FDI can build up productivity base in Africa. But we are already seeing Southeast Asia economy like in Vietnam. Right.
Okay. Thank you. There's a question here from.
Thank you.
The name is Minister of Finance and Coordinating Minister of the Economy of Nigeria. And I would just like to maybe throw it out there partly as a comment on what we are doing in terms of this all important trend, this global, demographic, where I think by 2050, 25% of the world's workforce will come from Africa. And what are we doing to get ready for that? And I would just like to say it's in Nigeria. There's another trend that we see the provision of services over the internet, virtually as a means of, employing some of the 600,000 graduates that we have every year and feeding into that all important provision of, high quality jobs. So we are, providing 90,000, kilometers of fiber optic just to start with, to provide the young people with what they need. And I think that, my question would be that, what do you think should be the response from the rest of the world in terms of looking at where the people that need to be skilled are coming from and contributing to that, skill development, which the world needs to have a workforce that fits the bill. Thank you.
Do you want to take that?
Sure. We've done some research with Stanford University, and we continue to do so. But one of the findings, that they've seen and this is related to your question on digital jobs and a growing young workforce, is that occupations that are exposed to AI have, vulnerability when it comes to early career. You think about what AI can do, it can automate certain tasks, and you think about what you did when you were 22. You think about how many of those tasks could be done by AI right now. And you worry about your past self. So I think what in every country early career is needs to be thought of intentionally by employers. So this is the first statement as AI changes the way we work and how we work, young people have to be brought along. But particularly when you look at certain professions that are starved of young talent and it's in professional services, it's in construction, it's in the care economy and the healthy economy. And how robotics will often fill that gap. There will be a growing need for these digital jobs and digital skills and digital trainees. And I think it's an excellent opportunity. So I applaud your efforts in Nigeria. I think employers, good universities, of course, have a responsibility to educate, but the skill development is going to be so quick that by the time you leave the workforce, get another degree or certificate, come back to the workforce. Your job's changed already. And so employers are going to be in this, new role of bringing their talent and talent all over the world with them so that they can keep up with the innovation they'd like to achieve. And that's the world where we're heading. It's different than the world of the past.
Well, thank you all very much. I'd like ending on a note of dynamism. Right. The economy is uncertain. We're two handed economists with three opinions about where it's going, but we can still hear a lot of opportunity in different parts of the world and appreciate your questions and participation. And thank you very much.
Excellent.