By Prof. Nuwagaba Augustus: Bank of Uganda Deputy Governor
The global economy is looking interesting in 2026. Global growth is estimated at 2.8%, which is pretty decent.
The U.S. economy is expected to continue to drive global growth, with forecasts for 2026 GDP growth estimated at 2.6%, supported by tax cuts, easier financial conditions, and a reduced drag from tariffs.
China’s GDP is forecast to expand by around 4.5% to 4.8% in 2026. The major driver will be manufacturing and IT equipment, and services.
The Eurozone is expected to grow slowly, with forecasts around 1.3%–1.7%. Germany (the largest economy in Europe) is projected to see a gradual recovery, with projections around 1.2% GDP growth, driven by government spending and enhanced export sector performance.
For Japan, the 2026 outlook points to a moderate recovery with an estimated 1.3% real GDP growth.The major drivers will be the expansionary fiscal policy, strong global IT demand, and soft energy prices.
So, what are the lessons from this outlook?
1) Tech Boom: AI investments are going through the roof, with some estimates to hit $500 Billion. This could lead to significant changes in how businesses operate.
While 2024/25 focused on generic tools (chatbots), 2026 is projected to be defined by agentic AI that is capable of reasoning, planning, and executing multi-step tasks across complex systems.
Other things to look at in AI spaces are the establishment of AI centralised infrastructures of data, and the integration of AI in supply chain systems.
2)Trade barriers: the era of rapid, effortless globalisation is being replaced by a more fragmented, selective protectionism approach, where major economies are increasingly adopting trade barriers to protect domestic industries.
This could be construed as against the principle of globalisation and competitive market operations, but is fundamental for the survival of nascent industries such as those in emerging markets and poor countries with high costs of initial product development and market penetration.
3)Emerging Markets: Some new markets are looking promising, especially those with AI exposure.
Implications on the 2026 global economic forecast for Africa in general :
1). This points to robust growth that could outpace the global average, driven by strong digital consumption adoption and critical minerals, but faces significant headwinds from debt distress, climate shocks, and global trade uncertainties.
2) This thus requires structural reforms to realise its potential and manage rising risks like AI’s impact on labour markets. Some countries in Africa have experienced reasonable growth, but uneven progress persists across regions, with ongoing efforts needed to balance fiscal health with development needs.
The 2026 economic outlook is therefore largely positive, with projections for strong GDP growth (around 6.5-7% for FY2025/26, potentially double digits in 2026/27 driven by mineral development (including oil and gas), IT adoption, manufacturing, agro-investments, tourism, and infrastructure development. Africa must wake up and grab these opportunities. – @NewsSA_Online
(This article is derived from a post on X (formerly Twitter) by Prof. Nuwagaba Augustus, who is Deputy Governor of the Bank of Uganda).
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