2026 will be a year in which the resilience of macro balances will be tested more than the speed of growth for the global economy. The search for direction in monetary policies, geopolitical risks, repositioning in capital flows, and the impact of artificial intelligence investments on productivity are becoming the fundamental elements determining the quality of growth. While 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 carries the character of a macro threshold where stability rather than speed, the search for balance rather than expansion, and sustainability rather than growth will be tested.
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 classical cycle. While artificial intelligence investments act as the locomotive of growth, easing financial conditions are also supportive. However, geopolitical developments, policy uncertainties, and question marks 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 is for global growth to be around 3 percent in 2026, below potential but far from the risk of recession. The reduction in tariff pass-through in the US supports the disinflation process. However, due to stickiness in inflation, the Fed reaching its 2 percent target remains for 2027. Geopolitical commodity volatility continues to be an upside risk. In the labor market, a gradual cooling rather than a sharp deterioration prevails. This picture indicates that the Fed will maintain its cautious stance in the first half of the year. The fact that Powell's term ends in May and the signals from the new chair nominee Warsh regarding lower interest rates and a change in the policy framework increase uncertainty regarding monetary policy in the second half of the year. Inflation, which has been above 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 cut this year in its latest projections, market pricing suggests there could be more. While increasing political rhetoric deepens debates about 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 adversely affect financial conditions.
Global financial markets: Artificial intelligence theme and gold stand out in portfolios
Concerns about 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 rate differentials, and falling real interest rates limit the dollar's upside potential. While increasing supply in US bonds and concerns about fiscal discipline create upward pressure on the term premium demanded for long-term risks, the loss of momentum in growth and expectations for interest rate cuts partially offset this effect. Investor interest in US stocks and gold may remain relatively strong. While double-digit profitability, artificial intelligence investments, and interest 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 safe-haven demand for gold, strong purchases by central banks since 2022 also support this trend. While the orientation towards real assets against the depreciation of currencies is one of the fundamental elements supporting gold, potential interest rate cuts also strengthen this outlook. In this context, gold is becoming a more permanent diversification tool in portfolios.
Turkey's economy: Cautious balance in the disinflation process
Although growth is losing momentum domestically, domestic demand conditions remain 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 pointed to 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 in the main trend is observed. In its first Inflation Report of the year, the CBRT revised its 2026 forecast to 18 percent due to changes in basket weights and an increase in the food assumption, and the upper band to 21 percent. 12-month-ahead expectations 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 suggests the year will end with a policy rate of around 28 percent. Although the current account deficit shows a limited increase relative to national income, it is still below its 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 strengthened significantly provides a buffer against external shocks. While the ratio of the budget deficit to national income is expected to follow a path consistent with the MTP, coordination between monetary and fiscal policy is important for the sustainability of disinflation. Reserve accumulation, declining dollarization, and current account balance dynamics, which have improved compared to previous years, support the credit outlook with a more permanent macro framework. The continuation of credit rating upgrades depends on a permanent decline in inflation, a decrease in external financing needs, and policy continuity.
Domestic financial markets: Growing interest in TL assets
A relatively positive divergence in terms of trade policies, foreign policy, and macro outlook supports TL assets with a falling risk premium. Attractive real interest rates and reserve adequacy, combined with the interest rate path proceeding in line with market expectations, keep investor interest in the TL alive. While 2026 began with strong fund inflows to emerging countries and Turkey, capital flows will continue even if geopolitical developments create short-term volatility. Increasing real returns, interest rate cuts, and interest in emerging countries also bring TL bonds to the fore. Stocks, which moved largely in response 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 value creation in both global and domestic portfolios.
Legal Disclaimer Note: 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.