Another year of resilience: 3 calls for the global economy in 2027
In light of recent projections for 2027, the desk sees a resilient global economy emerging, characterized by moderate growth, easing inflation, and steady central bank policy. As stated in the analysis by ING, the potential for a benign macro environment is notable, especially as the investment in AI and infrastructure could support sustainable growth. However, the backdrop of political risks in Europe presents a caveat that traders must consider amidst this optimistic outlook. The desk highlights that maintaining economic stability in the face of these risks will be crucial for currency movements as we head into next year.
What the desk is arguing
The desk presents the thesis that global economic resilience is likely in 2027 despite identified risks. Per the full note from ING, the anticipated investment in infrastructure and AI, alongside a moderation in inflation, paints a hopeful picture. This combination could lead to central banks maintaining more neutral monetary policies, offering support to the global economy.
Key supporting evidence includes the expectation that inflation will ease, easing pressure on central banks, thereby potentially preserving growth momentum. ING notes that the overall economic mix of modest growth and mild policy restrictions could surprise many economists.
The alternative read would be rooted in the political upheavals expected in Europe, which could destabilize this otherwise optimistic outlook and affect the global economy in ways that have not yet been priced in.
Where it sits in our coverage
Currently, our consensus target for the EUR/USD is 1.075, with a range projected between 1.04 and 1.12. Specific targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This analysis slightly diverges from the broader market consensus, positioning our forecast near the upper end of the range, indicating a relatively bullish outlook compared to bofa's more cautious stance.
How other firms see it
Firms like jpmorgan and others seem to align in their positive outlook regarding the global economy, emphasizing resilience moving forward. Conversely, bofa presents a more cautious perspective amid potential disruptions, leading to diverging views.
It will be important to watch EUR/USD as central bank policies in Europe and the U.S. evolve to reflect changing economic conditions, particularly with inflation trajectories and growth forecasts feeding directly into currency valuation dynamics.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 012027 could see resilient global growth despite political risks, per ING.
- 02Investment in AI and infrastructure expected to support sustained economic activity.
- 03Easing inflation may lead to stable central bank policies, affecting currency dynamics.
- 04Potential political disruptions in Europe could pose challenges to this outlook.
Market implications
Traders should monitor EUR/USD closely, particularly as central banks' actions adapt to inflation trends, especially if signs of political unrest in Europe begin to emerge. Testing the resistance levels around 1.10 may provide insights into market sentiment and positioning.
Risks to this view
If the political climate in Europe deteriorates significantly, it could lead to heightened volatility, reversing the positive outlook for economic stability. Additionally, any unexpected acceleration in inflation could force central banks to adopt more aggressive tightening measures, impacting currency strength.
Articles Another year of resilience: 3 calls for the global economy in 2027 Published 08:58 Translate Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Despite a long list of risks, 2027 could deliver a surprisingly benign global backdrop of resilient growth, easing inflation and steady central banks. But political disruption in Europe and mounting fiscal pressures could quickly challenge that outlook Carsten Brzeski A brighter outlook for the global economy ING's base call: All will be good The list of potential downside risks is long, but the global economy will enjoy another year of resilience. In the US, the Trump administration is riding into the sunset without disruptive fireworks, sparing the global economy new trade tensions and new wars.
Instead, the investment boom in AI might slow down somewhat, but infrastructure investments and AI adoption will support growth in many economies as energy prices return to more normal levels. At the same time, the current inflation wave will lose momentum, allowing central banks to keep their powder dry. The mix of modest growth, slowing inflation and policy rates being only mildly restrictive could surprise many.
Admittedly, this is a scenario accompanied by a lot of uncertainty and noise, but underneath this well-known layer of risk and fear, an almost benign macro environment could emerge in 2027. What a nice change. Our risky call: Transatlantic divide makes an unexpected turn Over the last few years, Europe has often been left flabbergasted by political developments in the US and the increasingly hostile transatlantic relationship.
The US midterm results may now raise hopes that those ties can gradually recover. Yet just as the US appears to be stepping back from populist and hegemonic policies, Europe could be moving in the opposite direction. With elections next year in France, Italy, Poland, Spain, and maybe even Germany, Europe risks ushering in a new period of political disruption, with stronger eurosceptic forces weighing on sentiment and investment and complicating further European integration.
One upside of Donald Trump’s second term in office was that his politics and policies created a common adversary and brought Europe closer together. The irony of 2027 could be that, just as Trump enters his lame-duck period, political divisions within Europe begin to do the damage to European unity that external pressure from Washington never could. Our bold call: Global fiscal dominance Our bold call for the global economy sees many governments struggling with the pressures of higher interest rates, rising debt levels and the need to increase investments, while ensuring social or societal peace.
We have seen the script before; it’s one that leads to spiralling government debt and even higher interest rates. There are two main ways out of this situation. The first would be a globally coordinated debt restructuring, which is even too bold for this call.
The second is imposing direct or indirect pressures on major central banks to restart asset purchase programmes and keep bond yields under control, with the option to still write off government bonds once they are on central banks’ balance sheets. Global outlook Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument.
Read more Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Author Carsten Brzeski Global Head of Macro Carsten Brzeski is the Global Head of Macro for ING Research. Previously, he worked at ABN Amro, the Dutch Ministry of Finance and the European Commission. He is a 2019 JFK Memorial Policy Fellow… In this article ING's base call: All will be good Our risky call: Transatlantic divide makes an unexpected turn Our bold call: Global fiscal dominance
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