Economic Outlook: AI growth softens sharp edges of trade tensions

Subdued growth is forecast for the coming year, with AI-related investment the main driver of global trade

Our latest Economic Outlook  is now out. There are stark differences across individual markets from world-leading growth in India, to a more modest outlook in the eurozone where we see subdued confidence and investment. There is a high degree of uncertainty in some markets including China, whose economy is slowing, and Mexico where the future could be defined by out the outcome of USMCA negotiations.

When we look at the global economy, however, the outlook reveals a story with two main parts. On one side is a surprising level of strong growth powered by an AI boom, fed by hungry demand for data centres, chips and power. 

On the other, is a tale of muted growth, with weak consumer sentiment (especially in many advanced economies), structural challenges (particularly in China), and US trade volatility impacting all markets. 

What has been the primary driver of global growth during 2025?

The two biggest drivers of growth over the past year have included surging demand and investments in AI technologies, and the frontloading of exports in a bid to cross borders or build inventory before the implementation of tariffs.

It’s important to acknowledge that any growth driven by frontloading activity will inevitably be temporary. By its very nature, frontloading means that businesses (or households) build a stockpile which they can draw from in the near term. A slowdown will follow frontloaded growth as businesses (and consumers) will normally use their stockpiles before they will consider buying new inventory.

The growth of AI related-trade does not fit into the stockpile pattern, however. In fact, the US enjoyed a 1.7 percentage points boost of GDP-growth driven by AI-investments during the first half of the year. Other markets in the US AI-value chain also benefitted from the AI-boom, including Taiwan, Vietnam and Mexico.

Outside of AI, resilient domestic demand is underpinning growth in many emerging markets, especially in India. While this is slower than we have seen in previous years, the outlook for emerging markets remains more resilient than for most advanced economies.

Which markets are facing subdued growth and why?

The outlook for many advanced economies remains subdued, underscored by weak trade and investment. Although some markets in the eurozone are more resilient, including Spain, the bigger picture is one of poor consumer confidence and weak overall growth.  

Inflation across the eurozone is levelling out to normal. Growth of economic activity has been modest in 2025 (1.3%) and is projected to lower to 0.8% in 2026, largely as the negative effects of the US tariffs start to bite.

In the UK, business activity picked up pace in the first half of 2025, but this has since slowed. The broader business environment remains weak, although the country may enjoy some benefits of AI-driven growth.

Japan is facing weak export growth next year. The country benefitted from resilient export growth during 2025, but this will slow during the coming months despite the lessening of the US tariff rate to 15% and a new fiscal stimulus driven by the expansionary policies of new government.  

 
What are the major risks to watch out for in 2026?

One major risk to keep an eye on is the threat of tariff-inflamed trade tensions igniting into a full-blown trade war. So far, most economies have held back from a tit-for-tat approach to US tariffs and the White House has reduced the size of many of the tariffs following their initial announcements. However, there is no guarantee that the current fairly calm situation will remain. Anything could happen next year. It’s a situation we are watching closely.

We are also monitoring US debt sustainability and whether the AI-boom could lead to a correction in equity markets and a depreciation in the value of the dollar. If this were to happen, it could slow US investment and consumption and could also have a knock-on effect on global trade and finance.

More detail on these developments and the situation in the world’s major markets is available in the Atradius Economic Outlook. This has been researched and written by our team of economists including Dana Bodnar, Theo Smid and myself.

Download our Economic Outlook: Saved by the AI boom, December 2025 report