Trend Major economies enter 2026 on divergent balance sheet pathways
Summary
MGI reports that the largest economies entered 2026 on different trajectories: the United States in a productivity acceleration pattern but with public debt and equity levels that also admit sustained inflation or a balance sheet reset, Europe gravitating toward secular stagnation, and China working through a partial reset in which government spending and corporate investment still expand the balance sheet.
Classification
Main topicMacroeconomy & Finance
Region menusGlobal
Impactscope:global
Time horizon0-3 years (2026-07-26)
Last updated2026-07-29 04:49:52
Evidence 2
- The global balance sheet 2026: Imbalance and divergence McKinsey Global Institute page=3;section=At a glance 2026-07 accessed 2026-07-26
- The global balance sheet 2026: Imbalance and divergence McKinsey Global Institute page=5;section=Introduction 2026-07 accessed 2026-07-26
Observed signals 5
- SignalChina recorded the largest fall in wealth growth as investment, inflation, and property all slowed
- SignalChina works through a partial balance sheet reset with debt at all-time highs
- SignalFrance and Germany lost wealth in 2025 once exchange rate effects are removed
- SignalThe US shows a structural uptick in productivity and rates alongside inflation above target
- SignalThe eurozone returns to secular stagnation with flat productivity and high saving
Part of issues 4
- IssueChina's debt-financed growth model runs into limits that only consumption can relieve1 trends · 2 signals
- IssueSwing factors, not daily indicators, mark the shift between pathways1 trends · 0 signals
- IssueThe eurozone's swing factor is an uptick in productive investment1 trends · 1 signals
- IssueTwo of the four scenarios imply structurally higher interest rates1 trends · 0 signals
Relation types: constitutes · supports
Public id: fm-4db3009a3ec0