2026 will be a year for the global economy where the resilience of macro balances will be tested more than the speed of growth. The search for direction in monetary policies, geopolitical risks, the repositioning of capital flows, and the impact of artificial intelligence investments on productivity are becoming the fundamental elements determining the nature of growth. As the course of global financial conditions, inflation dynamics, and policy uncertainties shape risk appetite, the capacity to manage vulnerabilities in both developed and emerging economies stands out. In this context, 2026 serves as a macro threshold where stability will be tested more than speed, the search for balance more than expansion, and sustainability more than growth.
Geopolitical risks and uncertainties regarding economic policies in the global economy are now the "new normal." We are in a process of structural transformation rather than a classic cycle. While artificial intelligence investments act as the locomotive of growth, loosening financial conditions are also supportive. However, geopolitical developments, policy uncertainties, and questions regarding the efficiency of artificial intelligence investments keep downside risks alive. The K-shaped structure in the US, where growth is driven by high-income groups, signals vulnerability. The base scenario for 2026 is that global growth will realize at around 3 percent, below potential but far from the risk of recession. The decrease in tariff pass-through in the US supports the disinflation process. However, due to stickiness in inflation, the Fed's target of 2 percent remains pushed to 2027. Commodity volatility stemming from geopolitics continues to be an upside risk. In the labor market, a gradual cooling prevails rather than a sharp deterioration. This picture suggests that the Fed will maintain its cautious stance in the first half of the year. The fact that Powell's term expires in May and that the new presidential candidate Warsh is signaling lower interest rates and a change in the policy framework increases uncertainty regarding monetary policy in the second half of the year. Inflation, which has been above the target for five years, and the slowdown in the labor market are making the divergence within the Fed and between the Fed and the market more pronounced. While the institution forecasts only 1 rate cut this year in its latest projections, market pricing suggests there could be more. While increasing political rhetoric deepens discussions regarding the Fed's independence, the temporary inflationary effect of rising energy prices is also being evaluated. In this environment, an early and aggressive interest rate cut could affect financial conditions in the opposite direction.
Global Financial Markets: Artificial Intelligence Theme and Gold Stand Out in Portfolios
Concerns regarding the Fed's independence and the growing budget deficit are eroding the safe-haven perception of the dollar and US bonds. Although reserve currency status, resilient growth, and geopolitical risks support the dollar, high valuations, narrowing interest differentials, and falling real interest rates limit the dollar's upside potential. Increasing supply in US bonds and concerns about fiscal discipline create upward pressure on the term premium demanded for long-term risks, while the loss of momentum in growth and expectations for interest rate cuts partially balance this effect. Investor interest in US stocks and gold may remain relatively strong. While double-digit profitability, artificial intelligence investments, and rate cut expectations are supportive, high valuations and policy uncertainties may create periodic fluctuations in the US stock market. While global risks and uncertainties increase the demand for gold as a safe haven, strong purchases by central banks since 2022 also support this trend. The shift toward real assets against the depreciation of currencies is one of the fundamental elements supporting gold, and possible interest rate cuts also strengthen this outlook. In this context, gold is becoming a more permanent diversification tool in portfolios.
Turkish Economy: Cautious Balance in the Disinflation Process
Although growth is losing momentum domestically, domestic demand conditions are far from supporting disinflation due to the increasing contribution of private consumption. Although domestic demand maintains its relatively resilient course, the ISO manufacturing PMI has been signaling a contraction in production for nearly 2 years. While a growth path close to 4 percent seems possible in 2026, geopolitical developments are a downside risk factor. Although inflation remains above 30 percent at the beginning of the year due to price adjustments and food-related increases, a temporary rise is observed in the main trend. In its first Inflation Report of the year, the CBRT revised its 2026 forecast to 18 percent and the upper band to 21 percent due to changes in basket weights and the increase in the food assumption. Expectations for 12 months ahead are at 22, 32, and 49 percent for the market, the real sector, and households, respectively. Stickiness in services inflation, high food prices, rising energy prices, and resilient domestic demand support the CBRT's cautious stance. Market pricing points to the year ending with a policy rate of around 28 percent. Although the current account deficit has shown a limited increase relative to the national income, it is still below long-term averages. While the current account deficit is expected to increase in 2026, volatility in gold and energy prices and global trade uncertainties pose risks. The fact that CBRT reserves have significantly strengthened provides a buffer against external shocks. While the ratio of the budget deficit to national income is expected to be in line with the MTP, coordination between monetary and fiscal policy is important for the persistence of disinflation. Reserve accumulation, declining dollarization, and current account balance dynamics that have improved relative to previous years support the credit outlook with a more permanent macro framework. Further credit rating upgrades depend on a permanent decline in inflation, a decrease in external financing needs, and policy continuity.
Domestic Financial Markets: Increasing Interest in TL Assets
A relatively positive divergence in terms of trade policies, foreign policy, and the macro outlook supports TL assets with a falling risk premium. Attractive real interest rates and reserve adequacy, along with the interest rate path proceeding in line with market expectations, keep investors' interest in the TL alive. While 2026 began with strong fund flows to emerging countries and Turkey, although geopolitical developments create volatility in the short term, capital flows will continue. Increasing real returns, interest rate cuts, and interest in emerging countries also make TL bonds stand out. Stocks, which moved largely sensitive to the disinflation path in 2025, started 2026 strongly with increased foreign interest. The Fed and CBRT's cutting process, increasing global risk appetite, emerging market fund flows, and a relatively discounted outlook support this picture. In 2026, resilience and diversification will be the fundamental elements of creating value in both global and domestic portfolios.
Legal Disclaimer: The evaluations and opinions included in this article are general in nature and do not fall within the scope of investment consultancy.
This content has been translated using artificial intelligence technology.