Reuters Poll: Global Inflation Expectations Revised Up, Growth Forecasts Cut
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A Reuters poll of nearly 500 economists raised 2026 inflation forecasts for 39 of 50 major economies while cutting growth estimates for 32 — the Middle East conflict and a 20%-plus oil rally are pushing the world toward what one strategist calls a 'mild stagflationary shock.'
Nearly 500 economists raised inflation and cut growth at the same time — what happened?
Reuters surveyed nearly 500 economists between June 29 and July 27, covering 50 major economies.
Inflation forecasts for 2026 were raised in 39 of those economies; growth forecasts were cut in 32.
This means → the global economy is drifting into a "prices up, growth down" combination — a consensus on stagflation risk is forming among professional forecasters.
Oil up 20% — how does the Middle East conflict feed into inflation?
Since the Middle East conflict erupted, international oil prices have risen more than 20%, briefly topping $100 a barrel last week.
Prices pulled back after the U.S. paused airstrikes on Iran, but analysts warn the risk of further upside in oil has not faded.
Claudio Irigoyen, BofA's head of global economics, called the shock a "mild stagflationary shock" and said "markets and some peers may be underestimating the persistence of inflation."
In plain terms = oil is the "base-layer cost" of the global economy. A 20% jump ripples into the production and shipping cost of nearly everything — that is why 39 economies saw inflation forecasts revised up at the same time.
Global growth forecasts held steady — what kept them up?
The 2026 global growth median stands at 2.9%, and 2027 at 3.1% — unchanged from three months ago.
The key variable holding that number in place is AI-related investment. Douglas Porter, chief economist at BMO, said: "Without this wave of Big Tech spending on AI, the global economy would be in a much weaker place — not just the U.S."
U.S. and China growth forecasts held at 2.2% and 4.6% respectively; South Korea and Taiwan saw GDP estimates raised on AI demand.
AI investment propped up the headline — but who got left behind?
Frederic Neumann, HSBC's chief Asia economist, warned that Asia's bright spot is AI investment, but "the boom rests on a very narrow base — few beneficiaries, and stagnation elsewhere is being masked."
This means → AI investment is a single pillar holding up the growth number. Beyond that pillar, underlying fundamentals are weakening — the appearance of stable totals hides a deepening structural split.
Among the sharpest growth downgrades, Kuwait, Bahrain, Qatar, and Saudi Arabia led the decline due to direct conflict exposure, though a rebound is expected next year. The eurozone 2026 growth forecast was slashed from 0.9% in April to 0.5%, with 2027 expected to recover to 1.2%.
The Fed has cut rates three times, yet long-end yields keep rising — what does that tell us?
The U.S. 10-year Treasury yield is near its highest level since the start of Trump's second term, even though the Fed has cut rates three times in total.
This reflects a market that prices inflation more pessimistically than the Fed does — rate cuts pushed down the short end, but the long end rose instead, signaling investors do not believe inflation will cool soon.
In plain terms = the central bank is tapping the brakes (cutting rates), but the market is saying "the accelerator hasn't been released" — whether inflation expectations actually come down will be the pivotal variable for central-bank policy paths over the coming quarters.
Content is for reference only, not financial advice.