Slide 1: Half-Time Outlook 2026-27: AI Holds the Score, Growth Slows to +2.5%
Half-Time Outlook 2026-27: AI Holds the Score, Growth Slows to +2.5% Allianz Research End of Q2 2026 updated economic and capital markets outlook 8 July 2026
Slide 2: Half-Time Outlook 2026-27 (1/2)
GLOBAL ECONOMIC OUTLOOK 2026-2027 Half-Time Outlook 2026-27: AI Holds the Score, Growth Slows to +2.5% (1/2) 1 Yellow card only: As the Middle East conflict de-escalates – despite temporary flare-ups – we expect only a mild slowdown in global growth in 2026 to +2.5%, followed by a rebound to +2.9% i
Slide 3: Half-Time Outlook 2026-27 (2/2)
GLOBAL ECONOMIC OUTLOOK 2026-2027 Half-Time Outlook 2026-27: AI Holds the Score, Growth Slows to +2.5% (2/2) 4 Capital markets are playing the advantage, largely looking through near-term risks. US rates should gradually decline to 4.35% by the end of 2026 and 4.1% in 2027 as inflation pressures and
Slide 4: The ongoing AI boom keeps economic growth resilient in the current polycrisis environment
GLOBAL ECONOMIC OUTLOOK 2026-2027 The ongoing AI boom keeps economic growth resilient in the current polycrisis environment Three shocks, three regions, one winner Manufacturing new orders picking up amid AI Contribution to annual GDP growth, % buildout & frontloading and despite global shocks PMI n
Slide 5: Markets ride the AI euphoria while disconnecting from uncertainty and risks ahead
GLOBAL ECONOMIC OUTLOOK 2026-2027 Markets ride the AI euphoria while disconnecting from uncertainty and risks ahead Markets swung from fear to cheer despite a plethora Global economic policy uncertainty considerably of risks ahead above trend Total return of selected assets, % Index The number of ri
Slide 6: Hormuz normalization will be slow, frictional, and reversible
GLOBAL ECONOMIC OUTLOOK 2026-27 Hormuz normalization will be slow, frictional, and reversible Hormuz traffic remains far below pre-war levels but is Past evidence suggests a gradual, phased reopening — slowly increasing security normalization takes longer than physical Number of Vessels crossing Hor
Slide 7: Oil markets are well-supplied, but super-glut remains a risk
GLOBAL ECONOMIC OUTLOOK 2026-27 Oil markets are well-supplied, but super-glut remains a risk Brent Matrix: Supply normalization drives prices lower Brent forecast USD/BBL USD/BBL DEMAND SHOCK (Mbpd) S\ -5 -4 -3 -2 -1 0 1 2 3 4 5 D -5 $85 $90 $95 $100 $105 $110 $115 $120 $125 $130 $135 Hormuz closed:
Slide 8: Gas prices will remain above pre-war levels by 2027
GLOBAL ECONOMIC OUTLOOK 2026-27 Gas prices will remain above pre-war levels by 2027 Natural gas forecast EU will be able to further catch up its gas restocking EUR/MWh % 100 2023 2024 2025 2026 90 80 70 60 50 40 30 20 10 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 8 Sources: LSEG Datastream, A
Slide 9: Inflation is likely to return to pre-war levels in 2027
GLOBAL ECONOMIC OUTLOOK 2026-27 Inflation is likely to return to pre-war levels in 2027 Inflation rate forecasts Inflation close to peak in US and EZ % Quarterly inflation y/y in % Inflation (yearly %) 2023 2024 2025 2026f 2027f Global 6.1 4.7 3.8 5.1 3.3 USA 4.1 3.0 2.7 3.3 2.2 Latin America 14.8 1
Slide 10: The contained energy shock will not lead to second round effects
GLOBAL ECONOMIC OUTLOOK 2026-27 The contained energy shock will not lead to second round effects but other risks loom for inflation 2026 energy shock is much smaller than 2022 with Higher producer prices in China could feed into second round effects also expected to be marginal imported inflation go
Slide 11: Central banks to revert to neutral by 2027
GLOBAL ECONOMIC OUTLOOK 2026-27 With inflation on target and economic output subdued, central banks to revert to neutral by 2027 ECB is done after one insurance hike while the Fed Output gaps becoming more neutral by 2027 and inflation will deliver one hike before easing again in 2027 close to targe
Slide 12: Purchasing power squeezed, but equity wealth keeps the US consumer strong
GLOBAL ECONOMIC OUTLOOK 2026-27 Purchasing power squeezed, but equity wealth keeps the US consumer strong Inflation is eating into wages again, squeezing real However, US households save far less as equity purchasing power and decreasing confidence holdings provide a tailwind if markets are up Real
Slide 13: Labor markets are holding up well, but AI will significantly reshape them
GLOBAL ECONOMIC OUTLOOK 2026-27 Labor markets are holding up well, but AI will significantly reshape them in the medium run Unemployment is near its structural equilibrium on AI will boost productivity but hit employment with the both sides of the Atlantic net effect widening the US–Europe growth ga
Slide 14: AI boom helps avoid a trade recession in 2026
GLOBAL ECONOMIC OUTLOOK 2026-27 AI boom helps avoid a trade recession in 2026 Trade remains strong on the back of AI-linked supply Trade of goods to grow by 2.9% in 2026 and 2.4% in chains 2027 as Hormuz closure and trade war top losses Goods and services trade growth in volume, % Contribution to tr
Slide 15: Trade tariffs will rise after July 24th but should not derail global trade
GLOBAL ECONOMIC OUTLOOK 2026-27 Trade tariffs will rise after July 24th but should not derail global trade Section 301 expected to bring average US tariff rate Asian EMs to be the most impacted by the change to back to pre-Supreme Court decision levels Section 301 tariff arrangement Effective tariff
Slide 16: AI continues to support booming US investment, while defense capex in Europe still missing
GLOBAL ECONOMIC OUTLOOK 2026-27 AI continues to support booming US investment, while defense capex in Europe still missing Manufacturing investment intentions are diverging Diverging stance: US firms splurge on AI infrastructure, between the US and the Eurozone European defense industry leverages pu
Slide 17: Defense, energy, and the NGEU cliff delay fiscal consolidation
GLOBAL ECONOMIC OUTLOOK 2026-27 Defense, energy, and the NGEU cliff delay fiscal consolidation Defense and energy-crisis measures prevent After 2026, the economic benefits of NGEU persist, but narrowing public balances the loss of grant income weighs on public finances Government fiscal balance, % o
Slide 18: German fiscal bazooka is substantial, but implementation continues to be gradual
GLOBAL ECONOMIC OUTLOOK 2026-27 German fiscal bazooka is substantial, but implementation continues to be gradual Fiscal expansion boosts public spending, but budget Gradual rollout of SVIK, with 39% of planned reallocations into special funds visible in 2026 spending for 2026 and 27% of defense expe
Slide 19: US fiscal policy stance easing in 2026
GLOBAL ECONOMIC OUTLOOK 2026-27 US fiscal policy stance easing in 2026, supportive of growth but increasing fiscal risks Interest expenses are rising fast relative to GDP and Fiscal loosening in 2026 (0.6% GDP) is supporting revenues households & corporates’ incomes Federal government % GDP 0,3 4,0
Slide 20: Temporary slowdown of global GDP growth
GLOBAL ECONOMIC OUTLOOK 2026-27 Temporary slowdown of global GDP growth The Iran escalation hits Europe and Middle East We expect normalization in growth from Q3 2026 harder than other regions GDP growth, q/q in % Growth (yearly %) 2023 2024 2025 2026f 2027f Global 2.8 2.9 3.0 2.5 2.9 USA 2.9 2.8 2.
Slide 21: EM fundamentals hold through the energy shock
GLOBAL ECONOMIC OUTLOOK 2026-27 EM fundamentals hold through the energy shock Consumers turns gloomier than firms, with Southeast EM currencies broadly hold with limited losses in Asia and Middle East hit hardest Asia, Türkiye, Argentina; 2025 gains intact elsewhere Change since start of the war (po
Slide 22: Super El Niño could reshape the balance across countries
© Allianz 2026 GLOBAL ECONOMIC OUTLOOK 2026-27 Super El Niño could reshape the balance across countries, with higher inflation in Asia Urea is back at prewar level but phosphate still Impact of previous strong El Niño expensive as sulfur squeeze persists (% deviation vs 5y trend in production) (USD/
Slide 23: The Iran war will have taken a toll on the fiscal deficit in EMs
GLOBAL ECONOMIC OUTLOOK 2026-27 The Iran war will have taken a toll on the fiscal deficit in EMs Fiscal spending increased as the closure of Hormuz Fuel prices have started easing following the US-Iran persisted deal Size of the bubble represent the measures announced, % of GDP 70 4 UAE; 0,04% May v
Slide 24: Energy shock brings higher inflation in EMs, shifting monetary policy
GLOBAL ECONOMIC OUTLOOK 2026-27 Energy shock brings higher inflation in EMs, shifting monetary policy Inflation expectations higher across EMs due to the Asia and Kenya still plan to hike through 2026 as war, especially in 2026 orthodox monetary policy reigns Difference between forecasts (Q4 2025 vs
Slide 25: Multi-order risks remain skewed to the downside in 2026…
GLOBAL ECONOMIC OUTLOOK 2026-27 Multi-order risks remain skewed to the downside in 2026… JAN – FEB JULY JULY Geopolitical tensions (Latam, Iran, 4 years of war in Ukraine US Tariffs Section 122 expiry USMCA review Greenland) BASELINE SCENARIO BASELINE SCENARIO BASELINE SCENARIO BASELINE SCENARIO Lim
Slide 26: …and beyond
GLOBAL ECONOMIC OUTLOOK 2026-27 …and beyond De-dollarization shock reloaded AI bubble burst Private markets BASELINE SCENARIO BASELINE SCENARIO BASELINE SCENARIO No Revenge Tax or similar policy triggers de-dollarization. Soft landing of the stock market. Slow but recovering PE distributions; loss r
Slide 27: The world before and after Trump's re-election
GLOBAL ECONOMIC OUTLOOK 2026-27 The world before and after Trump’s re-election: an uneven rightward shift by 2029 The right advances in Latin America, retreats in Europe Right-bloc governments span the Americas and much Number of Right-block governments by region, before and after Trump’s re- electi
Slide 28: Corporate Outlook
Corporate Outlook 2026-2027 © Allianz 2026 28
Slide 29: The war in Iran did not derail corporate earnings in Q1 2026
© Allianz 2026 GLOBAL ECONOMIC OUTLOOK 2026-27 The war in Iran did not derail corporate earnings in Q1 2026 Most sectors remained resilient in Europe Tech continues to fuel US earnings EPS growth, % EPS growth, % Sources: LSEG Datastream, Allianz Research Sources: LSEG Datastream, Allianz Research 2
Slide 30: Tech drives near-term momentum; 2027 growth broadens
GLOBAL ECONOMIC OUTLOOK 2026-27 Tech drives near-term momentum; 2027 growth broadens 2026 sector outlook revisions (June vs. March) 2027 sector outlook revisions (June vs. March) 11,5 Electronics Upward revision 8,0 Upward revision 9,5 7,0 Information & Electronics 6,0 Construction com. services 7,5
Slide 31: Hormuz might be open but some sectors to feel delayed impact
© Allianz 2026 GLOBAL ECONOMIC OUTLOOK 2026-27 Hormuz might be open but some sectors to feel delayed impact Some sectors with lagged impact from Hormuz to Auto sector particularly exposed to rising rates get challenged in Q3 Net leverage by sector Sources: Allianz Research Sources: LSEG Datastream,
Slide 32: Business insolvencies are expected to rise by +4% in 2026
GLOBAL ECONOMIC OUTLOOK 2026-27 Business insolvencies are expected to rise by +4% in 2026 Business insolvencies rose by +5% YTD The global rise in insolvencies to soften to +4% in Latest figures by country as of June 2026 2026 (-2pps from April) before a plateau in 2027 National (US, China) and regi
Slide 33: 2026–29: Secular trends
2026–29: Secular trends From structural shifts to sector opportunities Geopolitical Fragmentation, Defense & Aerospace Strategic Autonomy & Supply Logistics & Warehouse Infrastructure Chain Reconfiguration Power grid (operators & distributors) Energy Security, Electrification Critical mine
Slide 34: Capital markets outlook
Capital markets outlook 2026-2027 © Allianz 2026 34
Slide 35: Capital market outlook: Cautiously optimistic
GLOBAL ECONOMIC OUTLOOK 2026-27 Capital market outlook: Cautiously optimistic Capital markets: Eurozone and US Capital markets: UK, emerging markets, FX year-end figures year-end figures EMU Last* Unit 2023 2024 2025 2026f 2027f UK Last* Unit 2023 2024 2025 2026f 2027f Government Debt Government Deb
Slide 36: Global rates: Not much downward pressure amid high deficits and ongoing QT
GLOBAL ECONOMIC OUTLOOK 2026-27 Global rates: Not much downward pressure amid high deficits and ongoing QT in Europe and Japan Global long rates have peaked but remain in a ECB’s QT program at full run-off speed spills large “higher for longer” regime amounts of Bunds to markets Yield in % Share of
Slide 37: EZ spreads: French election fears will temporarily raise OAT spreads
GLOBAL ECONOMIC OUTLOOK 2026-27 EZ spreads: French election fears will temporarily raise OAT spreads again Sovereign spreads will reflect election risk in France but French presidential election uncertainty with stabilize afterwards prediction markets overstating far-right victory Yield spreads vs.
Slide 38: US dollar strength could return thanks to strong fundamentals
GLOBAL ECONOMIC OUTLOOK 2026-27 US dollar strength could return thanks to strong fundamentals but US policy uncertainty a backstop Interest rate differentials do not point towards USD Real effective exchange rates see EUR/USD at fair weakness anymore levels currently Interest rate differential in pp
Slide 39: Euro credit: carry keeps paying, spreads stay tight
GLOBAL ECONOMIC OUTLOOK 2026-27 Euro credit: carry keeps paying, spreads stay tight and fundamentals hold Spreads are expected to stay tight in 2026 and drift Net rating upgrades prevail but interest coverage dipped slightly wider driven by normalized fundamentals below median, posing risk in macro
Slide 40: US credit: strong technicals and growth support tight spreads
GLOBAL ECONOMIC OUTLOOK 2026-27 US credit: strong technicals and growth support tight spreads, while leverage worth watching US downgrades are easing, but re-leveraging bears Strong demand for yield keeps spreads tight— watching as interest coverage already below average widening only in 2027 as mac
Slide 41: Equities: downside eased but low near-term upside
GLOBAL ECONOMIC OUTLOOK 2026-27 Equities: downside eased but low near-term upside Equities had a strong first half in 2026 thanks to Equity risk premium over nominal Treasuries is zero. outstanding earnings and the semiconductor hype Attractivity rests of on 2.6% premium to real yields. Index % © Al
Slide 42: Equity fundamentals: high US valuations reflect strong growth expectations
GLOBAL ECONOMIC OUTLOOK 2026-27 Equity fundamentals: high US valuations reflect strong growth expectations US valuations remain at upper end and rely on AI US earnings growth was previously only seen in premium and growth. recession rebounds. Europe is more modest. © Allianz 2026 Sources: LSEG Datas
Slide 43: Equity markets are boosted by ongoing semiconductor boom
GLOBAL ECONOMIC OUTLOOK 2026-27 Equity markets are boosted by ongoing semiconductor boom Semiconductors have been fueling returns & volatility The semi price cycle* has not peaked yet annualized returns (x-axis) vs annualized volatitility (y-axis) Cycle index (HP filter) 60% 0,6 Kospi 0,5 Philadelph
Slide 44: EM sovereign credit remains vulnerable to geopolitical repricing
GLOBAL ECONOMIC OUTLOOK 2026-27 EM sovereign credit remains vulnerable to geopolitical repricing EM local markets have repriced more sharply than Several EM local markets now trade away from what hard-currency credit fundamentals would suggest bps and % (RHS) Standardized deviation of selected local
Slide 45: Global Private Markets – Stabilizing returns
GLOBAL PRIVATE MARKETS – PERFORMANCE Global Private Markets – Stabilizing returns Private markets performance has stabilized Our scenario suggests non stellar returns for private y/y% performance for global private assets assets in the next two years 80% US Private Equity y/y (USD) US Private Debt y
Slide 46: Private equity should reaccelerate on operational improvements
PRIVATE MARKETS – PRIVATE EQUITY Private equity should reaccelerate on operational improvements so long as rates stay contained PE payouts to accelerate, absent fresh stagflation or This cycle, PE creates value by improving businesses, geopolitical shocks not riding multiple expansion as in 2020-21
Slide 47: The pressure relief valve: defaults easing, while dispersion continues
PRIVATE MARKETS – PRIVATE DEBT The pressure relief valve: defaults easing, while dispersion continues Headline default rates moderate to 4.4% in Q1 2026 Under the hood non-accruals drift higher in % selective sectors Default rate Non-accrual at cost % (rhs) BDC % Non-accruals by cost 10% 5% Avg 3Y 2
Slide 48: Private credit rerouting from software to silicon
PRIVATE MARKETS – PRIVATE DEBT Like a river finding new ground: private credit rerouting from software to silicon Software ~25% of private credit, BDC hit by AI AI hyperscalers increasingly finance capital disruption fears expenditures with debt 105 BDC Index Price to NAV(rhs) 1,00 200 Issued debt M
Slide 49: Despite strong new-build, data-center demand keeps outstripping supply
PRIVATE MARKETS – INFRASTRUCTURE Despite strong new-build, data-center demand keeps outstripping supply While data-center inventory surged across major … strong demand has driven vacancy rates to record markets … lows Q1 2023 Q1 2024 Q1 2025 Q1 2026 Q1 2023 Q1 2024 Q1 2025 Q1 2026 Northern Virginia
Slide 50: Rising AI adoption to further weigh on office demand
PRIVATE MARKETS – REAL ESTATE Rising AI adoption to further weigh on office demand Office-using functions are highly exposed to AI Office faces the greatest exposure risk among automation and argumentation commercial real estate property types Share of human tasks today Office 18,5% Share of human t
Slide 51: Regional outlooks
Regional outlooks 2026-2027 © Allianz 2026 51
Slide 52: US: moderate, but resilient growth to continue thanks to AI capex
GLOBAL ECONOMIC OUTLOOK 2026-27 US: moderate, but resilient growth to continue thanks to AI capex US households are reducing their savings to sustain AI capex strength is expected to support growth in spending amid income squeeze 2026 but to fade heading into 2027 % year-on-year % year-on-year 10 8
Slide 53: US consumers face an income squeeze, but cash buffers are elevated
GLOBAL ECONOMIC OUTLOOK 2026-27 US consumers face an income squeeze, but cash buffers are elevated US households’ real disposable income growth has US households carry large liquid assets turned negative % y/y 105 9 Real personal consumption expenditures Households cash, deposits and money market 10
Slide 54: Elevated inflation warrants Fed rate hike but shaky labor market
GLOBAL ECONOMIC OUTLOOK 2026-27 Elevated inflation warrants Fed rate hike but shaky labor market outlook will keep FOMC cautious Taylor rule prescribes lifting the Fed funds rate as The unemployment rate could approach 4.5% in the inflation picks up, output gap still positive next few months % 6,0 0
Slide 55: Eurozone: 2026 looks quite resilient
GLOBAL ECONOMIC OUTLOOK 2026-27 Eurozone: 2026 looks quite resilient as 2022 fears have quickly dissipated Despite Ireland representing only ~4% of EZ GDP, its The energy shock hit a cooling economy; labor volatility disproportionately affects the aggregate market is not as tight as in 2022 Annual G
Slide 56: Germany's fiscal support cushions external headwinds
GLOBAL ECONOMIC OUTLOOK 2026-27 Germany’s fiscal support cushions external headwinds, but energy shock still hit Germany has exited the danger zone of recession Energy dependence is exacerbating the challenges following the oil price shock faced by energy-intensive industries Oil price relative to l
Slide 57: Key policy areas must be addressed jointly as competitiveness reforms advance slowly
GLOBAL ECONOMIC OUTLOOK 2026-27 Key policy areas must be addressed jointly as competitiveness reforms advance too slowly Government measures to reduce bureaucracy are not Labor tax wedge lowered to 42% vs. 46% by 2040 by showing the envisaged effect broad pension reform, boosting long-term growth up
Slide 58: France: weak demand across most sectors
GLOBAL ECONOMIC OUTLOOK 2026-27 France: weak demand across most sectors should limit core price and wage pressures Short-term business cycle is very weak except in Core inflation should remain contained amid weak manufacturing domestic demand Business Indicator index % y/y 110 Manufacturing Construc
Slide 59: Italy: solid carry-over and NGEU final rush support the outlook
GLOBAL ECONOMIC OUTLOOK 2026-27 Italy: solid carry-over and NGEU final rush support the outlook ahead of 2027 election NGEU grant-related revenues improved fiscal The labor market outlook remains favorable but less position, but expiration looms as a new headwind dynamic than in recent years EURbn B
Slide 60: UK: growth is holding up, but core price pressures persist
GLOBAL ECONOMIC OUTLOOK 2026-27 UK: growth is holding up, but core price pressures persist High wage growth is providing some support to Strong wage growth is driven by the public sector consumers’ spending % y/y 3% 9 Retail sales %3m/3m - rhs 1,7 2% 8 Private sector wage Public sector wage Consumer
Slide 61: CEE: Energy shock pushes inflation higher
GLOBAL ECONOMIC OUTLOOK 2026-27 CEE: Energy shock pushes inflation higher, government measures cushion the impact 2026 inflation is forecast higher than before the Policy support is keeping headline inflation below conflict, with the exception of CZ,HU and PL where it would otherwise be Inflation fo
Slide 62: China: Resilient growth to be further supported by fiscal impulse
CHINA OUTLOOK China: Resilient growth to be further supported by fiscal impulse Chinese growth remains resilient at 4.7% in 2026, Bond issuance pace slightly behind 2025, pointing to supported by strong exports a pickup in H2 China GDP growth (%) and contributions by component (pp) 4%Local governmen
Slide 63: APAC: AI lifts growth to 4.3% in 2026
GLOBAL ECONOMIC OUTLOOK 2026-2027 APAC: AI lifts growth to 4.3% in 2026, but inflation spillovers cloud the outlook AI offsets 0.3pp of conflict losses, lifting APAC growth Inflation has already breached several central bank to 4.3% in 2026 but benefits are unevenly spread targets and should remain
Slide 64: LatAm: Cost of politics higher than that of energy
GLOBAL ECONOMIC OUTLOOK 2026-27 LatAm: Cost of politics higher than that of energy The October elections are reopening the gap in bond Real interest rates relative to the Fed are likely to yields between Brazil and other countries in the region narrow, but it will take longer for Brazil and Colombia
Slide 65: Middle East: cost of war being felt across the region
GLOBAL ECONOMIC OUTLOOK 2026-27 Middle East: cost of war being felt across the region GCC economic growth more than halved while GDP losses Tourism, hydrocarbon and trade main spread through the region contributors to lower GDP growth in the GCC in %y/y 2026 GDP growth Inflation Contribution to 2026
Slide 66: Africa: post-Covid growth story
GLOBAL ECONOMIC OUTLOOK 2026-27 Africa: post-Covid growth story: resilient fundamentals, AI-powered metals boom Energy shock erases 0.2pp GDP growth but stronger Metals/ minerals export growth surging on the back fundamentals to still deliver solid growth in Africa of the AI momentum GDP growth, % y
Slide 67: © Allianz 2026
© Allianz 2026