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2026-2027 Scenario – Spain: Between a global slowdown and domestic support

2026-04-14

Growth in the Spanish economy remains solid at the start of 2026, although it is showing signs of moderating in a more uncertain international environment. Domestic demand – underpinned by private consumption and investment – remains the main driver of economic activity, buoyed by a labour market that remains dynamic and by the impetus of public policies. At the same time, the external sector is making a more limited contribution, against a backdrop of weak global trade, despite the resilience of the services sector. The combination of moderately rising labour costs, sluggish productivity and targeted fiscal support is helping to stabilise growth in the short term, whilst revealing potential vulnerabilities. The economy is thus entering the coming quarters with robust fundamentals, but with increased dependence on domestic dynamics and greater vulnerability to changes in the geopolitical landscape.

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2026-2027 Scenario – France: growth weakened by rising energy prices and renewed uncertainty

2026-04-10

Economic activity slowed in 2025, whilst remaining resilient in a context of high uncertainty and rising trade tensions. The ongoing conflict in the Middle East has already resulted in higher energy prices and renewed geopolitical uncertainty. Under the assumption of a very gradual reopening of the Strait of Hormuz, without a return to normal conditions, consumer prices would accelerate on average in 2026, before inflation falls back below 2% in 2027. As in the previous year, economic activity would increase by 0.9% on average in 2026, benefiting from already solid growth carryover. Growth would remain at a similar level in 2027, caught between the opposing effects of the relative decline in energy prices and the past rise in interest rates.

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2026-2027 Scenario – Euro area: Domestic factors are keeping the risk of recession at bay

2026-04-07

This scenario is set against a backdrop of military, political and economic uncertainty that makes forecasting the scale of shocks and their macroeconomic impact particularly risky. But one thing is certain: the tightening of external constraints on the Eurozone, which is facing more volatile prices on global energy markets. Whilst, unlike in 2022, the risk is less one of shortages, its vulnerability to global prices has increased and the Eurozone is no longer on the smooth disinflationary path it was on before the war in the Middle East. Even if the scenario is shifting towards a medium-to-long-term risk linked to shipping through the Strait of Hormuz, recession and persistent inflation are relegated to adverse scenarios. Nevertheless, the energy supply shock and its inflationary consequences are amplified by a combination of potential constraints on supply capacity, tighter financial conditions and growing uncertainty: a combination that runs counter to our pre-war scenario of accelerating investment. The solid economic and financial position of private sector players, coupled with a broadly neutral and locally (particularly in Germany) expansionary fiscal policy stance, should nevertheless ensure growth of 0.8% in 2026 and 1.1% in 2027.

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World – Scenario 2026-2027: highly subject to change

2026-04-03

The powerful political and geopolitical consequences of the conflict in the Middle East will extend far beyond the more immediate ones that this scenario aims to identify. This conflict is not an isolated incident, but rather it is part of a series of supply shocks (the Covid pandemic, the war in Ukraine, Houthi attacks) that highlight critical dependencies on a few key chokepoints (eg, commodities, straits, hubs).

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2026-2027 Scenario – United Kingdom: a new ‘stagflationary’ shock

2026-04-02

The UK economy, still bearing the marks of the 2022 energy crisis, is confronting a fresh external supply shock stemming from the war in the Middle East. The economic situation prior to this conflict was fragile: GDP growth was still very modest in the second half of 2025; the unemployment rate had risen; and a surge in inflation eroded the household purchasing power against a backdrop of moderating wage growth. Rising gas and oil prices on global markets are expected to trigger an increase in consumer price inflation from March onwards, with more significant effects from the third quarter. We now anticipate inflation of close to 3.5% in the second half of the year, compared to forecasts below the 2% target three months ago. Higher inflation will weigh on real disposable income and household consumption. Investment prospects have also deteriorated. Business confidence will decline, hampered by uncertainty over the outlook for demand; production costs will rise and margins, already under pressure, will erode further. Against this backdrop, we believe the risk of a wage-price spiral is less likely to materialise than during previous shocks. We anticipate only one rate hike by the Bank of England (BoE) this year, in the second quarter, compared with the more than two hikes anticipated by the markets, and a resumption of monetary easing in the second quarter of 2027.

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India – After China in 2001, is India embarking on a new trade odyssey?

2026-02-20

Like 2001 was for China (the year it joined the WTO), will 2026 turn out to have been a pivotal year in India’s trading history? The country, now the world’s fifth largest economy in GDP terms, remains a minor player in international trade (17th in terms of exports, accounting for 1.8% of total world exports). Due to a rather protectionist stance focused on its domestic market, particularly in agriculture, India had so far signed few free trade agreements and was among the countries with the highest import tariffs. Recently, in the space of just two weeks, the country made significate progress with its top two trading partners, concluding negotiations with the European Union that began nearly 20 years ago (in 2007) through a free trade treaty and reaching a deal with the United States. 

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