Global gross domestic product will increase 2.8% in 2026, above the consensus forecast of 2.5%, according to a new report from Goldman Sachs Research.

In the United States, economic growth is expected to accelerate to 2.6%, while China’s GDP will expand 4.8%, as strong exports outweigh sluggish domestic demand. Tax cuts, easier financial conditions, and a reduced drag from tariffs will fuel the growth in the United States.

“We expect especially strong GDP growth in the first half of next year,” said Jan Hatzius, chief economist and head of Goldman Sachs Research.

The report stated that in the United States, inflation has remained elevated due to tariff pass-through. Excluding tariffs, Goldman estimates that inflation has continued to fall, and currently stands at 2.3%. In 2026, “the impact on year-on-year inflation will diminish sharply in the second half,” assuming tariffs remain near current levels, the report said.

Goldman also projects that the U.S. Federal Reserve will reduce its policy rate by at least 50 basis points to 3%-3.25% in 2026. If inflation remains tame, the Fed may be able to make further reductions.

The report also found that the impact of artificial intelligence on jobs and productivity has so far mainly been confined to the technology sector. Larger productivity benefits from AI remain a few years away.

Regarding China, Hatzius said the nation has demonstrated the capability to deter high tariffs on its exports. This suggests “the Chinese manufacturing sector should continue to grow robustly,” he said.