Global Economic Outlook: From Shock to Adaptation, Growth Persists Despite Mounting Pressures (EDC Investments)

Summary

• EDC Economics expects West Texas Intermediate crude oil to average around US$86 per barrel in 2026 and US$82 per barrel in 2027.p.3
• The yield on the U.S. 10-year Treasury bond has risen by nearly 80 basis points since the start of the year.p.3
• EDC expects the U.S. Federal Reserve to raise rates once more before the end of the year and again in early 2027.p.3
• The Bank of Canada is expected to hold its policy rate at 2.25% through most of 2027.p.4
• The Canadian dollar is expected to average roughly 72 cents per U.S. dollar over the forecast period.p.4
• EDC forecasts China growth of 4.7% in 2026 and 4.5% in 2027.p.4
• Germany's 2026 growth forecast is lifted to 0.9%.p.4

Key insights

1. Six months after the closure of the Strait of Hormuz, the global economy continues to expand despite strained supply chains and lower global oil demand.p.3
2. Higher energy costs are expected to keep inflation high in Canada, the U.S. and Europe, with the Federal Reserve and European Central Bank raising rates.p.7
3. Higher government bond yields are keeping mortgage and other borrowing rates high, weighing on household spending, housing activity and business investment.p.8
4. AI and data centre-related investment is contributing nearly as much to U.S. GDP growth as consumer spending.p.9
5. In China, exports and industrial production remain strong while domestic demand is much weaker.p.4
6. The global economy has shifted from shock to adaptation, but not yet to recovery.p.4