AI Boom and Energy Shocks Widen Global Economic Divergence as Central Bank Policy Timing Becomes Increasingly Uneven
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AI Boom and Energy Shocks Widen Global Economic Divergence as Central Bank Policy Timing Becomes Increasingly Uneven
Nomura believes the US remains a relative outperformer among major economies, China's weak domestic demand cannot be fully offset by the AI boom, and Europe and some Asian economies face policy constraints of raising or maintaining high rates due to inflation pressure.
- The Fed is expected to remain on hold indefinitely because of stronger resilience in US employment and inflation, and no consensus on rate cuts has yet formed within the FOMC.
- The ECB is expected to raise rates in June and July to contain second-round inflation effects; euro area HICP inflation is expected to remain above 3.0% through early 2027.
- China's economy is described as becoming more K-shaped, with the AI boom helping productivity but unable to offset the drag from property and weak domestic demand.
- Asian economies are clearly diverging: Taiwan, South Korea, Malaysia, and Singapore benefit from the AI investment cycle, while India, Indonesia, and the Philippines face balance-of-payments pressure triggered by energy prices.
Report interpretation
Overview
This Nomura global economic outlook monthly focuses on the intersecting effects of AI transformation and commodity price shocks. The report argues that the US is relatively outperforming due to resilient employment, inflation, and investment; Europe, the UK, and several Asian economies require tighter policy responses under pressure from energy prices and inflation expectations; and although China is supported by AI, weak domestic demand, property, and income divergence remain major drags.
Core views
The core view of the report is that the global economy is no longer moving in sync, and that economic fundamentals and policymakers’ reaction functions are also diverging. For the US, Nomura expects the Fed to remain on hold for a long time, with hikes only possible if inflation becomes further unanchored. Canada faces weaker growth and a softer labor market, and the BoC is expected to maintain an easing stance. Inflation pressure is rising in the euro area and the UK, putting the ECB and BoE under pressure to hike, respectively. China's policy still needs to maintain proactive fiscal and accommodative monetary support to underpin demand, but reserve requirement cuts or rate cuts may not come in the near term. The Asian tech cycle supports Taiwan, South Korea, Malaysia, and Singapore, but energy prices and external balance pressures pose challenges for India, Indonesia, and the Philippines.
Analysis framework
The report uses a region-by-region macro forecasting framework, assessing each economy’s growth, inflation, labor market, fiscal policy, monetary policy, and key risks one by one, and comparing policy path differences through central bank rate forecasts and economic forecast tables.
Methodology notes
Infer central bank policy paths from changes in growth, inflation, and employment
The report repeatedly compares GDP, inflation, labor markets, and central bank communication to judge whether central banks will stay on hold, hike, or remain accommodative.
Compare the differentiated effects of AI investment, energy shocks, and policy constraints across economies
The report analyzes the US, China, euro area, UK, Canada, Japan, and Asian economies side by side, emphasizing that the same shock produces different growth and inflation outcomes under different economic structures.
Assess the impact of Middle East conflict, Strait of Hormuz risks, and rising energy prices on growth, inflation, and balance of payments
The report treats the Middle East conflict as a key exogenous variable affecting energy importers, inflation paths, and policy tightening risks.
Asset mapping & comparison
Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).
- US Macro AssetsRelatively benefit from resilient employment, investment, and consumption
- Strengths
- The economy is relatively insulated from Hormuz risks, while fixed investment and consumption remain supportive.
- Weaknesses
- Inflation resilience limits room for rate cuts.
- Comparison
- Relative to most developed economies, the US is seen as a clear outperformer.
- Risks
- If inflation rises further, the risk of Fed hikes increases.
- Euro Area Rates and Fixed IncomeDirectly affected by rising inflation and ECB hike expectations
- Strengths
- German fiscal expansion provides some support for growth.
- Weaknesses
- Higher dependence on energy imports creates simultaneous inflation and growth shocks.
- Comparison
- Compared with the US, euro area growth is more fragile but policy is more likely to turn toward hikes.
- Risks
- Persistently high energy prices, sticky services inflation, and fiscal-political uncertainty.
- China Macro AssetsAffected jointly by weak domestic demand, property drag, AI investment, and policy support
- Strengths
- AI advancement may improve long-term productivity, while policy still maintains a proactive fiscal and accommodative monetary orientation.
- Weaknesses
- Weak domestic demand, property drag, and regional income divergence may suppress consumption.
- Comparison
- Compared with Asian economies benefiting from AI, China's AI boom is unlikely to fully offset structural growth pressure.
- Risks
- The Middle East situation, US-China relations, the pace of policy stimulus, and property and equity market trends all present two-way risks.
- Asian AI Supply Chain EconomiesTaiwan, South Korea, Malaysia, and Singapore benefit from the AI investment cycle
- Strengths
- The tech upcycle supports exports, investment, and growth.
- Weaknesses
- Inflation pressure may force central banks to tighten policy.
- Comparison
- Relative to Thailand and the Philippines, the report is more optimistic on growth in Taiwan, Malaysia, Singapore, and India.
- Risks
- Energy prices, El Nino, a pullback in the global tech cycle, and policy tightening.
- Energy-Importing EconomiesNegatively affected by Middle East conflict and rising energy prices
- Strengths
- Some economies can mitigate short-term shocks through fiscal or FX buffers.
- Weaknesses
- Rising pressure on inflation, current accounts, and fiscal deficits.
- Comparison
- Compared with the US, these economies are more sensitive to Hormuz and energy price shocks.
- Risks
- A prolonged conflict, further oil price increases, supply chain disruptions, and forced monetary tightening.
Key data
- Fed Policy PathExpected to remain on hold indefinitelyThe report says stronger resilience in employment and inflation means most FOMC members still have no consensus on rate cuts.
- ECB Policy PathExpected to hike twice in June and July 2026The June meeting is expected to deliver a 25bp hike to 2.25% to avoid de-anchoring inflation expectations.
- Euro Area Inflation ForecastHICP inflation is expected to remain above 3.0% y-o-y through early 2027Energy shocks and sticky service prices are the main reasons.
- Euro Area Growth ForecastGDP growth of 0.4% in 2026 and 1.4% in 2027The report also notes that PMI below 50 indicates recent contraction in activity.
- UK Policy PathBoE is expected to hike in July 2026 and cut twice in the second half of 2027The hike is seen as a signaling tool to manage second-round inflation effects.
- China Inflation ForecastFull-year CPI and PPI are forecast at 0.6% y-o-y and 1.0%, respectivelyHigher energy and AI-related material prices pose upside risks, but domestic demand remains weak.
- China Policy ViewNo reserve requirement cut or rate cut is expected before Q2 next yearThe report points out that liquidity is ample and China government bond yields are declining.
- Australia GrowthQ1 real GDP grew 0.3% q-o-qThe report lowered its 2026 GDP growth forecast by 0.4 percentage points.
- South Korea Rate PathThree 25bp hikes expected, with a terminal rate of 3.25%The BOK is focused on strong growth and demand-side inflation.
- Singapore InflationCore inflation is expected to rise above 2.0%Spillovers from the tech cycle and strong domestic demand support growth and push up inflation.
Impact & implications
In investment terms, the report points to stronger regional and asset divergence: US macro resilience may support the relative performance of the dollar and US risk assets; euro area and UK rate expectations face upward pressure; China assets still need to watch the strength of policy support and the pace of property recovery; and Asian economies benefiting from the AI supply chain have relative growth advantages, while economies with higher dependence on energy imports face inflation and balance-of-payments pressure.
Risks
- Escalation of the Middle East conflict or a prolonged closure of the Strait of Hormuz could keep energy prices elevated.
- Rising global inflation expectations could trigger more central bank hikes or delay rate cuts.
- China's domestic demand and property recovery may fall short of expectations, and AI investment may provide only limited support to aggregate demand.
- US-China relations, trade agreement negotiations, and political events across countries may intensify uncertainty.
- Energy price shocks may increase balance-of-payments pressure on economies such as India, Indonesia, and the Philippines.
What to watch
- Whether the FOMC continues to maintain consensus against rate cuts, and whether US employment and inflation data strengthen further.
- The pace of ECB hikes at the June and July meetings and market pricing for subsequent hikes.
- The acceleration of China's fiscal spending, property policies, credit demand, and changes in CGB yields.
- The Middle East conflict, Strait of Hormuz risks, and global oil and gas price trends.
- Whether Asian AI supply chain orders, capex, and export data continue to support growth.