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Key Views Global Monthly July 2026

The global economy remains resilient in the face of a succession of shocks. With the latest energy shock now fading, a capex troika centred around AI, defence and the energy transition are likely to drive growth going forward. This is likely to support growth at roughly around trend rates in advanced economies over the coming quarters. The global investment surge is also supporting growth in China, the economy of which remains nonetheless imbalanced to the point that it is engendering new trade tensions with the EU. Against this backdrop, inflation will remain somewhat elevated over the coming months, and this should keep central banks leaning hawkish, with the ECB expected to raise rates one last time in September. Both central banks are then expected to resume rate cuts in early 2027.

Global economic forecasts as of 2 July 2026

Group Economics writes regularly about developments in the macro economy. Here are our latest forecasts on interest rate and currency developments, energy prices and the economic trend in developed and emerging markets.

Eurozone: The energy shock is dragging – and driving – consumption

Surging EV sales suggest consumption was not only hindered, but also helped by the energy shock. With the energy shock fading, consumer confidence is likely to recover, further helping consumption. The ECB is still expected to hike once more in September, with rate cuts expected in Q2-Q3 2027.

Global Monthly - Teflon economy shaking off another shock

The global economy remains resilient in the face of persistent shocks. The AI boom, defence spending and the energy transition ‘capex troika’ are likely to continue supporting growth going forward. Still, AI bubble risk, and sovereign debt dynamics remain a worry.

Top of Mind - UK Politics – PM Starmer resigns, what comes next?

UK Prime Minister Starmer has resigned. The decision did not come as a surprise following his rival Andy Burnham’s landslide victory at last Thursday’s by-election. As we said in our Top of Mind webinar, Burnham will almost certainly go on to become the UK’s next prime minister. Indeed, one of his closest rivals Wes Streeting also came out this morning to endorse Andy Burnham, and it is possible that Burnham may become PM unopposed. Other possible challengers such as Angela Rayner and Ed Miliband have yet to explicitly state their stance.

Top of Mind - UK & BoE outlook post-Makerfield

Andy Burnham won the Makerfield by-election, and he will now almost certainly go on to enter Number 10 Downing Street. What would that mean for the UK economy and for interest rates? In this Top of Mind call, Bill Diviney takes stock of both the election and Thursday’s Bank of England meeting, with an update on our latest expectation for the economy and monetary policy. Larissa Fritz then discusses the impact on gilt markets, while Georgette Boele discusses the outlook for sterling.

US and Iran strike a deal - What’s next?

ECB suggests more hikes to come

The ECB raised interest rates by 25bp at the June Governing Council meeting as was widely expected. Its communication and forecasts suggested that there will likely be more rate hikes to come.

ECB to hike this week and signal more on the cards

The ECB Governing Council meets this week to decide on its monetary policy, where it will also have aid of updated projections on the economy and inflation. We expect the ECB to raise its key policy interest rates by 25bp as well as signalling that further monetary tightening is on the cards going forward.

Services drives May eurozone inflation rise

Eurozone inflation picked up in line with expectations to 3.2% in May, from 3% in April, while core inflation surprised to the upside, rising to 2.5% (ABN/consensus: 2.4%) from 2.2%. Energy continues to be the biggest driver of inflation, but held steady in May at 10.9% y/y, as a rise in petrol prices was probably offset to a greater extent than expected by falling diesel prices. Indeed, as we pointed out in our latest Global Monthly, the gap between diesel and petrol – which widened as refineries struggled to replace lost Middle Eastern diesel supply – has now largely normalised as European refineries filled the gap. Food inflation also unexpectedly fell back, to 2% from 2.4% in April, though there was considerable variation across countries this month (for instance, France saw a big rise in food inflation).