Mercerwelcome tobrighterEconomicandmarkeroutlook 2026ReshapingAbusiness ofMarshMclennan
AppendixReshapingExecutivesummarynterest rates will also help.At the time of writina. thelabor marketis showing signs of weakness, but we do noByRupert Watson,GiobalHeadofEconomisexpedtamateril rise in unemployment,espedialy f theand DynamicAssetAllocation.Mercereconomy strengthens slightly as we expectIlnwestments lkeytoremah strong divenbythe2026islikely to followsuit. President Trumps,esums involved are huge and arelikelytohaveputtheUS onadifferentpath tothattrofnd other countrieswherethesince1945, rippinq upthe old economicconsensuThe aftermath of this administration will be felt focadesfromnow.Theexolosive'shouldalsostrenathen alittleartificial intelligence (Al) may herald theg-led growth inGermany onthealthough its consequendcture and defense spending plans.th in the eurozone islikelyto beis that it is likely to matter from an economicxt fewyears, it remains to be seenfinancialmarket perspective,a will bestrong. Much will dependYoaliBerraoncesaid."It's touahtomakforms recommended in thebecially about the future," but as investored, whether this willtranslatead markets.In 2025, the twodentTrump'strade agendaalarm at the time, seems to have hadut the UK.Its problems arebact on growth, and the ongoingAIgovernmentspending,hayfade further into the backgroundon the alobaleconomy, while Al willces. The new Labour qovernment hasauntocrasp thescle of the challege, butWe expect the alobal economy tostrenathen alittle inufident progress has been made.Having sald that,dwinds fade and monetary and fiscalesimism about the UK sems overblown and, as wearain.In the US. we are likely toseeexolainedin a recent paper;, we do not see the UK fadingthe continued slow pass-through of tariffs to consumerhurting real income and thus real consumptionthe OneBiaBeautifulBillAct(OBBBA)'shouldWeremain optimistic on the outlook for Japan and thinkprovide fiscalsupport, while stronq equitymarkets ovethe eraof deflationis over and that Japan may be enteringthe last few yearsshould further improve household,a new phase characterized by stronger nominal growthandimproved corporategovernance,Economic and MarketOutlok 2026
Inflatio:AppendixIn China, the property crisis persists, with consumptiorsupportequities,althoughit isworth remembering thatstuck at low levels. However, China's lead in a broad rangewhile the technology optimists were right in the latesupporttheeconomyoverthenexdecade, while an eventual consumer recoveryshould helpexpensive technology stocks performed very poorly overthe subsequent decade, For the time being, we are neutralUS, Al iswithChinese Alproducts andin equities overalland are watching howfastand broad Ausage growsexoectalobalinflationtobehear central banks targets. In theelkeytosee a near-termspike becausewe would expect this effect to fade aroundata2006throuah 2027. We see waae arowth asthekeyfinflation over the medium term.This isning inflation should...
