Global economic growth is expected to stay at similar pace in 2026 as in 2025 (3.1%) , still affected by uncertainties related to global trade and the adaptation to new policies, while a modest rebound could occur in 2027 (3.2%). Although this would mark a mild recovery, it would still be well below the 3.7% average global growth observed in the early 2000s (pre-pandemic).

This pace of growth is insufficient to meet looming global challenges. An ageing population and China’s structural slowdown are weighing on the world’s growth potential. Geopolitical uncertainty and fragmentation are further dampening economic momentum. Additionally, widening fiscal imbalances in many countries could pose significant risks in the coming years.

Resetting global growth will require a proactive structural reboot. In essence, the world must reignite growth by replacing its current engines with new ones. A possible roadmap that we present in this report involves three simultaneous initiatives:

• Re-globalising the world: Strengthening multilateralism on more solid foundations.
• A productivity revolution: Driven by transformative technologies such as AI.
• Growth-boosting smart regulation: Designed to unlock financing and stimulate investment.

Global inflation is declining, albeit at different rates across regions. In the past few years, monetary policy tightening has largely achieved a ‘soft landing’ globally, and labour markets have proved remarkably resilient throughout.

Many central banks are now in the final stages of their easing cycles, though terminal interest rates remain significantly higher than those of the past decade — reflecting a new equilibrium level. Notably, these higher rates have so far coexisted with historically low unemployment in many major economies (the US, the euro area, the UK, etc.) as well as in key emerging markets (Brazil, Mexico, etc.).

Looking ahead, we expect unemployment to remain low in most countries where Santander operates through 2026 and 2027. For example, jobless rates are expected to hold around 4% in the US, 6% in the euro area, less than 5% in the UK, and 6% across seven leading Latin American economies (LatAm7). This labour market strength gives central banks greater flexibility: they can maintain vigilance and even tighten policy again if needed, without necessarily derailing growth.

The combination of early-stage, AI-driven business opportunities and the monetary policy easing cycle is boosting equity valuations. At the same time, underlying geopolitical risks are creating a bifurcated market, which is mirrored in valuations: equities in several markets are at record highs even as gold and other traditional safe haven assets also reach new peaks.

Growth projections by region indicate a moderate recovery with some divergence:

• United States: GDP growth of roughly 1.8% in 2026, accelerating slightly to 1.9% in 2027.
• Euro area: Growth picking up from about 1.3% in 2026 to 1.7% in 2027. However, Spain’s GDP will slow down to 2.0% and 1.7% over the next two years.
• United Kingdom: Modest growth of around 1% in 2026, improving to 1.4% in 2027.
• Brazil: Growth of approximately 1.5% in 2026, below its historical average, rising to 1.8% in 2027.
• Mexico: Growth of roughly 1.0% in 2026, climbing to 2.0% in 2027.

From a structural and long-term perspective, this report also addresses several key questions in a section titled ‘Special topics’:

• What level will interest rates reach in the long term?
• What is the relationship between the quality of regulation and a country’s productivity?
• How will AI impact the global economy?
• What is happening in housing markets around the world?
• What challenges is Europe’s automotive industry facing?
• What could the EU-Mercosur agreement mean for these regions?