Goldman Sachs Lowers Its 2026 Global Growth View, Forecast Moves Further Below Consensus

Overview

This is a Goldman Sachs global economic indicators update covering the Financial Conditions Index, FCI impulse, Current Activity Indicator, MAP Surprise Index, wage and inflation indicators, fiscal impulse, and short-run capacity utilization scores, among other proprietary macro indicators. The key message is that Goldman Sachs' forecast for 2026 global growth has moved further below market consensus after a recent upward revision to commodity price forecasts, while global activity indicators remain above potential growth, albeit with clear divergence across regions and countries.

Core views

The main message is that the global growth outlook is weaker than consensus, financial conditions have edged tighter, and activity data remain resilient overall, though developed-market divergence is pronounced. Global FCI excluding Russia tightened by 11.6 bps last week, mainly from short-end rates, long-end rates, and equities; global March CAI was +3.0%, with a three-month average of +2.8%, still above potential; however, the weekly changes in CAI for economies such as the UK and Germany weakened materially.

Analysis framework

The report uses Goldman Sachs' proprietary cross-country high-frequency macro indicator framework, combining market variables, real activity data, inflation and wage indicators, fiscal policy, and capacity utilization to track changes in economic momentum across the global economy, developed markets, emerging markets, and major countries. The CAI aggregate uses GDP weights and market-exchange-rate country weights; for countries or indicators where some data have not yet been released, forecast values are included first and then replaced once actual data are published.

Methodology notes

• Financial ConditionsGS Financial Conditions Index

  The Financial Conditions Index measures how loose or tight the financial environment is in major economies.

  The metric is used to assess the GDP growth outlook, the transmission of monetary policy to the real economy, and the importance of financial shocks to the economy.

• Growth MomentumCurrent Activity Indicator

  CAI is the first principal component of multiple real activity indicators and is expressed in GDP-equivalent units.

  The CAI can be understood as the growth signal embedded in the main high-frequency indicators for each economy; when some data are not yet released, forecast values are included first and then replaced by actual values later.

• Macro SurpriseMAP Surprise Index

  The MAP Surprise Index aggregates the strength of global economic indicators relative to consensus expectations and their importance.

  This approach standardizes indicator selection, significance, surprise-score thresholds, and aggregation methods, while allowing local economists to provide limited judgment-based inputs.

• InflationTrimmed Core Inflation

  Trimmed core inflation removes the most extreme one-third of price changes within core inflation components.

  This method is intended to reduce the distortion from abnormal price swings when assessing the core inflation trend.

• Labor MarketJobs-Workers Gaps

  The jobs-workers gap measures the difference between aggregate labor demand and labor supply.

  Aggregate labor demand includes job vacancies and employment, while labor supply is the labor force; forecasts use high-frequency hiring data, initial jobless claims, and other leading unemployment indicators.

• Fiscal PolicyFiscal Impulses

  Fiscal impulses measure the impact of fiscal policy on real GDP growth.

  The report uses the fiscal impulse over the next four quarters to assess the marginal boost or drag from fiscal policy to growth.

• Capacity UtilizationShort-Run Utilization Scores

  Short-run utilization scores are based on hard data and survey indicators from the labor market and industrial sectors.

  The score is converted into GDP-equivalent units, and the report notes that it was previously called the short-run output gap.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• Global equities

  Affected by global growth expectations, financial conditions, and the earnings cycle

  Strengths

  Global CAI remains above potential growth, indicating that short-term demand has not stalled broadly.

  Weaknesses

  The 2026 global growth forecast is below consensus, and tighter financial conditions may weigh on valuations and earnings expectations.

  Comparison

  Compared with emerging markets, activity indicators in some developed markets are weaker, so regional allocation needs differentiation.

  Risks

  If the growth downgrade widens further or rates stay elevated, risk assets could come under pressure.

• Interest rates

  The main contributors to FCI tightening came from short-end and long-end rates

  Strengths

  Rate variables provide a direct signal for monetary-policy transmission and changes in the financial environment.

  Weaknesses

  Higher or persistently elevated rates raise financing costs and drag on growth.

  Comparison

  This week, short-end rates contributed +5.6 bps, higher than long-end rates at +4.2 bps.

  Risks

  Policy-path or inflation-data surprises could cause further volatility in rates and the FCI.

• Foreign exchange

  FX is one component of the FCI

  Strengths

  FX moves can partly cushion or amplify changes in financial conditions across economies.

  Weaknesses

  This week FX contributed -0.8 bps to global FCI excluding Russia, moving differently from rates and equities.

  Comparison

  Compared with rates and equities, the FX contribution is smaller.

  Risks

  Volatility in the dollar and major currencies could alter cross-country growth and inflation pressures.

• Commodities

  The report cites last week's upward revision to commodity price forecasts as the backdrop for the further widening of the below-consensus global growth forecast gap

  Strengths

  An upward revision in commodity price forecasts may reflect price support or supply-demand changes.

  Weaknesses

  Higher commodity prices can lift costs and inflation pressure, weighing on real growth.

  Comparison

  Goldman Sachs' forecast differs from Bloomberg Consensus on the path of commodity price changes.

  Risks

  Another surge in energy and raw material prices could intensify the downside risk to global growth.

• Emerging-market macro assets

  Emerging-market CAI is higher than developed-market CAI

  Strengths

  Emerging-market February CAI was +3.9%, with India and China readings remaining strong.

  Weaknesses

  The emerging-market weekly change was -0.5 percentage points, and China's weekly change was -1.2 percentage points.

  Comparison

  Developed-market March CAI was +1.9%, below emerging-market February's +3.9%.

  Risks

  If global financial conditions continue to tighten, emerging-market capital flows and currencies could come under pressure.

Key data

• Global FCI weekly change excluding Russia+11.6bpsMainly driven by short-end rates at +5.6bps, long-end rates at +4.2bps, and equities at +2.7bps; FX contributed -0.8bps.
• Global March CAI+3.0%Annualized month-over-month, weekly change -0.2 percentage points, three-month average +2.8%.
• Developed-market March CAI+1.9%Annualized month-over-month, weekly change -0.2 percentage points, three-month average +2.0%.
• Emerging-market February CAI+3.9%Annualized month-over-month, weekly change -0.5 percentage points, three-month average +4.1%.
• US March CAI+2.9%Data release coverage 33%, weekly change 0.0 percentage points, three-month average +2.7%.
• Germany March CAI-0.5%Data release coverage 35%, weekly change -0.5 percentage points, three-month average -0.8%.
• UK March CAI+0.2%Data release coverage 45%, weekly change -0.9 percentage points, three-month average +1.3%.
• China February CAI+4.4%Data release coverage 95%, weekly change -1.2 percentage points, three-month average +4.6%.
• India February CAI+7.3%Data release coverage 58%, weekly change 0.0 percentage points, three-month average +7.3%.
• US March short-run utilization score-2.0% of potentialWeekly change +0.1 percentage points, three-month average -2.1%.

Impact & implications

For investors, the report points to a downside gap between macro growth expectations and market consensus: if Goldman Sachs' forecast proves correct, risk assets may need to reprice 2026 growth expectations. Tighter financial conditions may curb future growth momentum; however, the global CAI remaining above potential growth suggests current activity has not yet broadly weakened. Regionally, emerging-market activity is stronger than developed markets, while short-term data in European economies such as the UK and Germany warrant closer attention.

Risks

• 2026 global growth may fall below market consensus.
• Further tightening of financial conditions may drag on subsequent GDP growth.
• Upward revisions to commodity prices may increase inflation and real income pressure.
• Short-term activity indicators weaken in economies such as the UK and Germany.
• Some CAI data include forecast values, and later actual releases may lead to revisions.
• The report is thematic and macro-indicator research, not a recommendation on any single security.

What to watch

• Whether the gap between the 2026 global GDP forecast and consensus continues to widen.
• Subsequent weekly changes in global FCI excluding Russia and the contribution from short-end rates.
• Whether CAI in the UK and Germany continues to decline.
• Whether CAI in emerging markets such as China and India can remain elevated.
• Whether wage trackers, trimmed core inflation, and the MAP Surprise Index show inflation or growth surprises.
• The impact of FCI impulses and fiscal impulses over the next four quarters on real GDP growth.