World Bank Lifts Global GDP Forecast on US Resilience

George Anderson

Data Interpretation

Remarks of Officials

Economic

China–U.S. Trade War

Daily News

Summary:

World Bank upgrades global growth, yet warns of long-term stagnation and deepening poverty in developing nations.

The global economy is showing more resilience than previously thought, prompting the World Bank to slightly upgrade its growth forecast for 2026. However, the institution warned on Tuesday that this growth is overly dependent on advanced economies and remains too weak to make a significant dent in extreme poverty.

In its latest Global Economic Prospects report, the World Bank projects global output will slow to 2.6% this year, following 2.7% growth in 2025. The forecast for 2027 sees growth returning to 2.7%.

The 2026 growth estimate of 2.6% marks a 0.2 percentage point increase from the bank’s June predictions. The forecast for 2025 has been revised upward more substantially, by 0.4 percentage points.

US Economy Drives Upward Revision

The World Bank attributed roughly two-thirds of this positive revision to the better-than-expected performance of the U.S. economy, which has held up despite trade disruptions from tariffs.

The forecast for U.S. GDP growth is now 2.2% in 2026, an upward revision of 0.2 percentage points. The projection for 2025 has been raised by half a percentage point to 2.1%.

According to the report, U.S. growth in 2025 was held back by an import surge as businesses rushed to get ahead of tariffs. Looking ahead to 2026, growth will be supported by larger tax incentives, though this will be partially offset by the negative impact of tariffs on investment and consumption.

A Warning of Long-Term Stagnation

Despite the short-term upgrades, the World Bank issued a stark warning. If current trends hold, the 2020s are poised to become the weakest decade for global growth since the 1960s. This sluggish pace is considered insufficient to prevent stagnation and rising joblessness in many emerging and developing nations.

"With each passing year, the global economy has become less capable of generating growth and seemingly more resilient to policy uncertainty," said Indermit Gill, the World Bank's Chief Economist. "But economic dynamism and resilience cannot diverge for long without fracturing public finance and credit markets."

Diverging Fortunes for Developing Economies

Growth across emerging market and developing economies is expected to slow from 4.2% in 2025 to 4.0% in 2026. While these figures represent upgrades of 0.3 and 0.2 percentage points respectively from the June forecast, the headline number masks a significant divergence.

The China Factor

China's economy is projected to slow, with growth falling from 4.9% in 2025 to 4.4% in 2026. However, both of these forecasts have been revised up by 0.4 percentage points due to the effects of fiscal stimulus and successful efforts to increase exports to markets outside the U.S.

Stagnation Risk Elsewhere

When China is excluded from the calculation, the growth rate for the rest of the emerging and developing world is forecast to be flat at 3.7% in both 2025 and 2026. This highlights the underlying weakness and reinforces concerns about the global economy's ability to lift populations out of poverty.

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Adam

Economic

President Donald Trump on Monday said any country doing business with Iran will face a 25% tariff “on any and all business being done with the United States of America.”

That new tariff on imports from Iran’s trading partners is “effective immediately,” Trump said in a Truth Social post.

“This Order is final and conclusive. Thank you for your attention to this matter!” he wrote.

Further details about the tariff announcement were not immediately clear. A White House official declined to answer CNBC’s questions about the president’s social media post.

The apparent effort by Trump to economically isolate Iran comes as the oil-rich Middle Eastern country struggles to suppress an ongoing swell of massive anti-government protests.

Dozens of those protesters have reportedly been killed in recent weeks; Trump has threatened to take military action against Iran if the killings continue.

The president has also explicitly encouraged the demonstrations against the Iranian regime. “Iran is looking at FREEDOM, perhaps like never before. The USA stands ready to help!!!” he wrote on social media on Saturday.

The announcement of new tariffs on Iran’s business partners also comes ahead of a much-anticipated Supreme Court ruling on whether many of Trump’s most expansive tariffs are legal.

Those tariffs — including his controversial “reciprocal” duties from early April and others related to purported fentanyl trafficking — were invoked using the International Emergency Economic Powers Act, or IEEPA.

It was unclear if Trump’s newly unveiled Iran-related tariffs also rest on that law.

Source: cnbc

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Adam

Commodity

Market Overview

WTI crude has finally made it back to around $59.7 a barrel, its highest point in over a month. That’s due to renewed tensions heating up in the world of geopolitics. People are getting anxious that this could disrupt global oil supply lines, which is making traders think oil prices will keep going up.

Its not just one region that’s causing the worry – bad weather and maintenance outages in key oil producing areas are also adding to the problem. All these factors put together have got traders thinking that there’ll be a lot less oil coming onto the market in the short term. And thats why oil and natural gas prices are getting a boost.

What we’re seeing here is that even without any actual production loss, geopolitical stress can really start to rattle energy markets. It can make prices all over the shop and make people start to worry about getting the oil they need.

Natural Gas Price Forecast

Natural Gas (NG) Price Chart

Natural gas futures are trading near $3.35 on the 4-hour chart after rebounding from the $3.13–$3.20 demand zone. Price remains capped below a descending trendline drawn from the December high, keeping the broader structure corrective. Recent candles show smaller bodies with long wicks, highlighting indecision rather than strong follow-through buying.

Technically, gas is still below both the 50-EMA and 200-EMA, which continue to slope lower and act as dynamic resistance near $3.60–$3.85. Horizontal resistance sits at $3.63, followed by $3.86. On the downside, $3.13 is key support, with a deeper floor near $2.92. The RSI around 45 signals weak momentum, consistent with a range-to-bearish bias. The trade idea is to sell rallies near $3.60, targeting $3.00, with a stop above $3.85.

WTI Oil Price Forecast

WTI Price Chart

WTI crude oil is trading near $60.00 on the 4-hour chart after a sharp rebound from the $55.70–$56.00 support zone. Price has broken above a descending trendline that capped rallies since November, signaling a shift in short-term structure. Recent bullish candles show strong bodies with limited upper wicks, suggesting follow-through buying rather than a false breakout.

Structurally, price is moving within a rising channel from the December lows. The recovery has cleared the 50-EMA, while the 200-EMA near $58.70 now acts as dynamic support. Resistance is seen at $60.50, followed by $61.50, while support sits at $58.70 and $57.50. The RSI near 60 reflects improving momentum without overextension. The trade idea is to buy pullbacks near $58.80, targeting $61.50, with a stop below $57.40.

Brent Oil Price Forecast

Brent Price Chart

Brent crude oil is trading near $64.30 on the 4-hour chart after breaking above a long-term descending trendline that had capped price action since October. The latest bullish candles show strong real bodies and closes near session highs, signaling improving buyer control rather than a short-covering spike.

Structurally, Brent has rebounded from the $59.70–$60.00 base and is now pushing higher within a developing ascending channel. Price has reclaimed the 50-EMA and is testing the 200-EMA near $64.00, a key inflection zone. A sustained hold above this level opens the door toward $65.30, followed by $66.70.

On the downside, support sits at $62.75 and $61.20. The RSI near 62 reflects strengthening momentum without overbought conditions. The trade idea is to buy pullbacks near $63.00, targeting $66.70, with a stop below $61.80.

Source: fxempire

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Warren Takunda

Economic

Latin American financial assets have emerged among the best-performing markets worldwide at the start of 2026, driven by an unusual alignment of positive political catalysts, strong commodity prices, and renewed global appetite for emerging markets.

Equities and currencies across the region have sharply outpaced developed markets, reversing several years of relative underperformance.

The shift in sentiment has been triggered by a sequence of closely timed developments.

A sustained upswing in commodity prices — particularly industrial and precious metals — has strengthened the outlook for South America’s export-driven economies.

And while the full consequences of the recent US seizure of Venezuela’s Nicolás Maduro have yet to play out, some investors view the ousting as positive. A number hope the move will reduce geopolitical tail risks long associated with the region.

Adding to the momentum, the announcement of the EU–Mercosur trade agreement revived expectations of deeper trade integration between Europe and Latin America, even as doubts remain over its full implementation.

Global macro conditions have also played a decisive role. Major investment banks, including Bank of America and AllianceBernstein, indicate that a weaker US dollar in 2026 is boosting the appeal of emerging market assets.

Historically, periods of dollar weakness have coincided with strong emerging market performance, as capital shifts toward countries where returns are higher.

Countries most exposed to metals markets have been the primary beneficiaries. Chile and Peru — key producers of copper, silver and gold — have enjoyed substantial windfall gains from the metals rally.

Chile, the world’s largest copper exporter, shipped 14.9 million tonnes of the metal in 2024, according to ITC Trade Map data.

Latin America shines among top-performing global markets

Performance data compiled by CountryETFTracker show that five Latin American countries now rank among the world’s ten best-performing equity markets over the past three months.

Chilean stocks are up 36.6% since mid-October, making them the best-performing investable equity market globally via exchange-traded funds. Simultaneously, the Chilean peso has appreciated more than 8% over the past two months, reflecting improved terms of trade and renewed portfolio inflows.

Argentina has been another standout, with a 27.45% rally in equity markets since October. Investors have responded positively to the liberalisation reforms introduced by President Javier Milei, who took office in December 2023.

The International Monetary Fund, in its latest Regional Economic Outlook, credited the Milei administration with enacting “an ambitious package of market-oriented reforms” targeting productivity, regulatory simplification, and fiscal sustainability.

The IMF noted that, if sustained, these reforms could yield substantial medium-term gains by opening Argentina’s economy and improving investor confidence. That's despite the fact that such austerity forms were particularly unpopular with the general public when first announced, triggering protests in Argentina.

Beyond Chile and Argentina, Peru has posted equity gains of around 27%, with the Peruvian sol now trading at its strongest level relative to the dollar in over five years.

Elsewhere, equities in Colombia rose about 16%, and Brazil has rounded out the regional leaders with a 12.9% rally.

By contrast, the US S&P 500 has gained just 4.8% over the same period, while Germany’s DAX is up around 5%, underscoring Latin America’s marked relative outperformance.

EU–Mercosur agreement signals strategic shift for Latin America

The long-awaited EU–Mercosur trade agreement, more than two decades in the making, is set to be formally signed on 17 January in Paraguay, marking a turning point in relations between Europe and South America.

For the founding members of the Mercosur bloc — Argentina, Brazil, Paraguay and Uruguay — the accord represents their first major trade agreement with an external partner, opening preferential access to a market of nearly 450 million EU consumers.

“The approval of the EU–Mercosur trade agreement is a landmark moment, creating the largest free trade area in the world by population,” Ángel Talavera, head of European macro at Oxford Economics, said in a note.

Combined, the EU and Mercosur economies account for around a quarter of global GDP and roughly 780 million people.

For Latin American markets, experts say the significance goes beyond improved agricultural access to Europe. The agreement is expected to lower tariff and non-tariff barriers on industrial inputs, particularly benefitting manufacturing-heavy economies such as Brazil and Argentina by reducing costs, improving competitiveness and strengthening supply-chain integration.

According to a study by Banco Santander, the deal is poised to transform trade and investment flows across South America. The EU already accounts for close to €370bn in foreign direct investment into Mercosur and over €125bn in annual trade.

Brazil’s Institute for Applied Economic Research expects the deal could lift Brazil’s GDP by around 0.5 percentage points and raise investment by 1.5 percentage points annually, reflecting stronger export prospects and increased foreign direct investment.

Estimates from Real Instituto Elcano and the Bank of Spain suggest EU–Latin America trade could expand by up to 70% over time, while intra-regional trade within Latin America could rise by as much as 40%.

A turning point for Latin America?

Latin America’s recent strong performance in global financial markets seems to reflect more than just cyclical tailwinds.

Rising commodity prices, easing geopolitical risks, and a weaker US dollar have all helped draw global investors back to the region after years of underperformance.

At the same time, reform momentum in countries such as Argentina and renewed trade links with Europe have improved perceptions of policy stability and long-term growth potential.

While challenges remain and many of the economic benefits will take time to materialise, markets are increasingly viewing Latin America as a relative bright spot among emerging economies.

For now, the region’s combination of high returns, improving fundamentals, and strategic relevance in global trade is proving hard for investors to ignore.

Source: Euronews

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Adam

Economic

Futures linked to the major U.S. stock indices inch lower, with traders gearing up for crucial economic figures and the start of the quarterly corporate earnings season. The Trump administration faces blowback over an investigation into Federal Reserve Chair Jerome Powell, while oil prices rise as anti-government protests in Iran intensify.

Futures dip

U.S. stock futures pointed lower on Tuesday as investors hunkered down before the release of key inflation data and a slew of earnings from banking giants.

By 03:05 ET (08:05 GMT), the Dow futures contract had fallen by 46 points, or 0.1%, S&P 500 futures had dipped by 6 points, or 0.1%, and Nasdaq 100 futures had slid by 39 points, or 0.2%.

The main averages on Wall Street finished in the green on Monday, rebounding from pressure earlier in the session linked to the implications of a criminal investigation into Powell and President Donald Trump’s proposed cap on credit card rates.

But stocks were eventually buoyed by strength across a range of sectors, including technology, consumer staples and materials.

"Overall, the narrative is largely the same now as it was on Friday, with bulls still in control thanks to improving growth dynamics, healthy earnings, evidence of a generational improvement in productivity, and stimulus [...] anticipation," analysts at Vital Knowledge said in a note.

White House faces blowback over Powell probe

The Trump administration has faced a wave of criticism over its move to open the criminal investigation into Powell, with condemnation coming from both former Fed leaders and even members of the president’s Republican Party.

Citing sources familiar with the matter, Reuters reported that the probe was approved and started by Jeanine Pirro, the U.S. Attorney for Washington and an ally Trump, but without Attorney General Pam Bondi nor Deputy Attorney General Todd Blanche being briefed.

Writing on social media, Pirro said the Justice Department had chosen to take action against the Fed because the central bank had refused to discuss an overrun in expenses related to the refurbishment of its Washington headquarters. Pirro added that her office "makes decisions based on the merits."

Yet the move, which cast fresh concerns over the independence of the Fed and sent U.S. Treasury bond rates higher, was slammed by former Fed Chairs Janet Yellen, Ben Bernanke and Alan Greenspan, who said "[t]his is how monetary policy is made in emerging markets with weak institutions." They warned of the "negative consequences" such actions could have on inflation and the function of the economy more broadly.

Meanwhile, Republican Senator Thom Tillis was joined by several colleagues in hitting out at the investigation. Tillis described it as a "huge mistake."

CPI ahead

With investors eyeing the developments around the Fed, attention now turns to the impending publication of the December U.S. consumer price index, a closely-monitored gauge of inflation.

Consumer prices in the world’s largest economy are seen rising by 2.7% in the twelve months to December, matching November’s rate. Month-on-month, the figure is also expected to equal November’s pace of 0.3%.

Stripping out more volatile items like food and fuel, so-called "core" CPI is forecast to accelerate slightly to 2.7% from 2.6% year-on-year, and to 0.3% from 0.2% on a monthly basis.

In a note, analysts at ING said they anticipate the core inflation figure will be hotter than expected, arguing that a prolonged U.S. government shutdown led to "more data collection occurr[ing] later in November, a period when Thanksgiving-related discounting is common."

"Compared with the full month of November 2024, this timing likely skewed that inflation reading lower. Reverting to more standard collection timings in December means risks of a hotter read," the ING analysts wrote.

Fed policymakers have recently prioritized a slowing jobs market over inflation when rolling out a series of interest rate reductions late last year. In theory, slashing rates can spur investment and hiring, albeit at the risk of reigniting prices.

Indications of sticky price gains could give Fed officials an extra factor to consider ahead of the next rate decision later this month. The Fed is widely tipped to keep rates unchanged at a range of 3.50% to 3.75%, according to CME FedWatch.

JPMorgan earnings loom large

Sentiment could also be swayed by a batch of results from major Wall Street lenders this week, beginning with the largest U.S. bank, JPMorgan Chase, on Tuesday.

On Wednesday, peers Bank of America, Citigroup and Wells Fargo will report, followed by Goldman Sachs and Morgan Stanley on Thursday.

Coupled with the inflation data, the outcome of the bank earnings could contribute to the tone for stock markets in the early weeks of 2026.

While the benchmark S&P has risen so far this year and posted a third straight year of double-digit growth in 2025, the outlook remains somewhat murky.

While the Fed is anticipated to cut rates again this year, the path ahead for borrowing costs in the coming months is still relatively unclear. At the same time, intensifying geopolitical strife has been one of the hallmarks of the first days of January, particularly with the Trump administration’s actions in Venezuela earlier this month and subsequent comments about potential interventions in countries and regions around the world.

Robust bank earnings could help paint an upbeat picture of the state of Corporate America, and possibly alleviate some worries among more jittery investors in the process.

Oil advances

Oil prices rose, climbing for a fourth consecutive session as intensifying anti-government protests in Iran have stoked concerns of disruption of supply from this key OPEC producer.

Brent futures gained 0.5% to $64.16 a barrel and U.S. West Texas Intermediate crude futures rose 0.8% to $59.82 a barrel.

The Brent contract reached a seven-week high in the previous session, while the WTI benchmark rose to a one-month high.

Source: investing

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Michelle

Forex

Economic

Core U.S. consumer prices rose less than predicted in December, reinforcing hopes that inflation is tempering as the Federal Reserve contemplates its next move on interest rates.

Excluding volatile food and energy prices, the consumer price index showed a seasonally adjusted 0.2% gain on a monthly basis and 2.6% annually, the Bureau of Labor Statistics reported Tuesday. Both were 0.1 percentage point below expectations. Though they look at both measures, Fed officials consider core inflation a better long-run gauge of where inflation is heading.

On a headline basis, the CPI posted an increase of 0.3% for the month, putting the all-items annual rate at 2.7%. Both were exactly in line with the Dow Jones consensus estimate.

The Fed targets inflation at 2% annually, so the report provides some evidence that the pace of prices increases is moving back to target but remains elevated.

Stock market futures rose following the report while Treasury yields were lower.

Shelter, a key element of stickiness, increased 0.4%, which was the biggest item for the monthly increase, according to the BLS. The category accounts for more than one-third of the CPI weighting and was up 3.2% on an annual basis.

Other parts of the report also showed inflation persisting.

Food prices jumped 0.7% for the month, accompanied by increases in recreation, air fares and medical care. Some tariff-sensitive categories also posted increases, including apparel. However, household furnishings saw a decrease as President Donald Trump backed off on threatened tariff increases for imports in that sector.

The 1.2% increase for recreation was the largest monthly gain ever for the index in data going back to 1993, the BLS said.

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Justin

Economic

Malaysia's property market is entering 2026 with a clearer hierarchy of performance, where alignment with structural demand, capital discipline and execution certainty are expected to matter more than broad market momentum, according to Knight Frank Malaysia.

Insights from the firm's Real Estate Highlights (REH) 2H2025 point to a market that is no longer moving in a single direction. Instead, assets that are well positioned in terms of purpose, infrastructure readiness and occupier relevance are expected to outperform, while misaligned developments face growing penalties.

"The market is no longer moving in a single direction. Over the past six months, we have seen a clear separation between assets that are aligned with structural demand and those that are not. In this environment, performance is determined by alignment, discipline and execution, rather than momentum alone," said group managing director Keith Ooi.

As Malaysia moves into 2026, policy support is expected to remain an enabling backdrop rather than a primary performance driver. Market outcomes will increasingly hinge on how well assets are aligned with long-term demand fundamentals, supported by delivery certainty and operational readiness.

Industrial, data centres and hospitality to anchor forward momentum

Looking ahead, the industrial and logistics sector is expected to remain resilient, though increasingly selective. Demand is likely to concentrate in locations that offer infrastructure readiness, power availability and operational efficiency, particularly within advanced manufacturing and logistics ecosystems.

"Heightened trade costs and policy uncertainty have temporarily disturbed industrial demand at the margins, reinforcing occupier and investor selectivity rather than reversing underlying market resilience," said senior executive director of land and industrial solutions Allan Sim.

The data centre sector is also transitioning into a more execution-driven phase heading into 2026. Growth is shifting away from headline investment announcements towards delivery certainty, governance readiness and access to critical resources such as power and water.

The data centre sector is seen transitioning into a more execution-driven phase in 2026.

"As the sector moves from commitments to delivery, project progress is increasingly shaped by execution factors such as contract timelines, customised customer requirements, the track record of operators and owners, as well as regulatory processes and available infrastructure capacity. Despite this, data centres remain a compelling alternative asset class for investors and developers," said executive director of valuation and advisory Justin Chee.

In hospitality, the sector is entering an early positioning phase ahead of Visit Malaysia 2026, with improving travel flows and sustained cross-border demand influencing room inventory planning and pricing strategies.

"The Visit Malaysia 2026 campaign targets millions of visitors and high tourism receipts, providing a powerful demand driver for hotel assets. This is expected to lift occupancy rates and average room rates, benefiting investment performance," said executive director of capital markets James Buckley.

He added that demand for hotel real estate, including serviced apartments and hybrid hotel-apartment concepts, is expanding, particularly in Kuala Lumpur, Johor and Penang.

Office, retail and residential markets remain polarised

The office market is expected to remain structurally polarised in 2026, with occupiers continuing to prioritise quality, flexibility and ESG compliance over scale.

Office buildings in Kuala Lumpur. (Photo by Low Yen Yeing/The Edge)

"Leasing decisions are increasingly centred on quality, flexibility and efficiency, which is accelerating the performance gap between newer, well positioned buildings and older stock," said senior executive director of office strategy and solutions Teh Young Khean.

The two-tier dynamics are most evident in the Klang Valley, where newer, green buildings are being absorbed earlier, while older stock faces mounting pressure unless actively repositioned.

In retail, performance is expected to remain highly dependent on format and location, with landlords prioritising tenant retention and mix optimisation amid intensifying competition.

"As competition intensifies, especially in overlapping catchments, landlords are prioritising tenant retention and mix optimisation over headline rental growth," said director of retail management and consultancy Yuen May Chee.

The residential market is likely to see continued demand in 2026, though buyers are becoming more discerning amid affordability pressures and a high supply pipeline.

"Demand remains active, but buyers are more selective due to the high housing pipeline, both existing and new inventory. We are seeing self-correction in selected markets through pricing and product discipline rather than broad-based recovery," said senior executive director of research and consultancy Judy Ong.

Infrastructure-led corridors, including the Rapid Transit System (RTS) Link in Johor and major rail and road projects across the Klang Valley and Penang, are expected to remain key demand drivers.

Outlook underpinned by 2H2025 research

Data from the second half of 2025 underscores why momentum alone is no longer sufficient.

Industrial markets continued to show resilience, with prime manufacturing facilities in the Klang Valley maintaining steady take-up, while Johor benefited from deeper cross-border integration under the Johor–Singapore Special Economic Zone. Penang recorded a 40.6% year-on-year increase in foreign direct investment, despite a decline in transaction volumes due to land scarcity.

Across the office, retail and residential segments, performance increasingly diverged based on asset quality, location and alignment with end-user demand. Overhang levels improved selectively where pricing and product offerings were well-calibrated, pointing to gradual market self-correction rather than a broad-based recovery.

Overall, the signals from 2H2025 suggest that the central challenge heading into 2026 is not whether demand exists, but whether strategies are aligned with the fundamentals that now matter most — infrastructure readiness, asset purpose and disciplined execution.