Executive summary
By 2026 the world will be grappling with intersecting shifts.
Economic activity is expected to moderate compared with 2025 as higher tariffs and policy uncertainty dampen growthoecd.org. Clean‑energy investment and digital transformation continue to reshape industries, while the advance of artificial intelligence spurs productivity but heightens regulatory and ethical challenges. Governments are under pressure to modernise infrastructure and adapt to climate risks, businesses must navigate evolving trade rules and sustainability reporting, and societies confront demographic shifts, labour‐market churn and the mental‑health crisis. This report synthesises forecasts and emerging trends to assess how 2026 may affect governments, businesses and society.
1. Economic and geopolitical outlook
1.1 Global growth and inflation
Economists forecast modest global expansion in 2026. The OECD expects world GDP growth to slow from 3.2 % in 2025 to 2.9 % in 2026; U.S. growth is projected to fall from 1.8 % to 1.5 %, China’s from 4.9 % to 4.4 %, and the euro area’s from 1.2 % to 1.0 %oecd.org. Slowing growth stems from trade tensions, higher tariffs and policy uncertaintyoecd.org. Headline inflation in G‑20 economies is expected to ease from 3.4 % in 2025 to 2.9 % in 2026oecd.org. Meanwhile the U.S. Congressional Budget Office (CBO) projects that real U.S. GDP will grow 2.2 % in 2026 thanks to tax cuts and full expensing of certain capital investments introduced in the 2025 reconciliation actcbo.gov. Despite this growth, the CBO warns that slower population growth restrains consumptioncbo.gov. Inflation measured by personal consumption expenditures (PCE) is forecast to fall from 3.1 % in 2025 to 2.4 % in 2026cbo.gov.
1.2 Monetary policy and financial conditions
The CBO expects the U.S. federal funds rate to decline from 4.3 % in August 2025 to 3.6 % by January 2026, then ease further afterwardscbo.gov. The National Association for Business Economics forecasts that the Federal Reserve may lower borrowing costs by 0.75 percentage points in 2026cbsnews.com. Lower rates could provide some relief to debt‑laden businesses and consumers, yet persistent geopolitical risk and high public debts limit room for fiscal stimulus. Higher tariffs and trade frictions—highlighted by the OECD as major drags on growth—could also contribute to volatilityoecd.org.
1.3 Labour market and income dynamics
Labour‑market conditions soften through 2025 but improve in 2026: the CBO projects U.S. unemployment at 4.2 % in 2026, down from 4.5 % at the end of 2025cbo.gov. However, the World Economic Forum’s Future of Jobs report indicates that 23 % of jobs will change by 2027; employers expect to create 69 million new jobs while eliminating 83 million, resulting in a net loss of 14 million jobsbajastartalent.com. Macrotrends such as the green transition and supply‑chain localisation drive job creation, whereas high inflation and supply shortages pose threatsbajastartalent.com. Big‑data, AI and machine‑learning roles are projected to grow 30 % by 2027, while clerical roles declinebajastartalent.com.
1.4 Geopolitical risk and elections
The world will face several key elections in 2026, including U.S. mid‑term elections and legislative elections in Mexico, India’s general election and major European parliamentary elections. Rising populism and economic inequality could reshape governments. Geopolitical tensions—particularly between the U.S. and China—will influence trade, technology and investment decisions. The U.S. America’s AI Action Plan published in July 2025 seeks to reposition the U.S. as a global AI leader by deregulating AI, rescinding the 2023 Biden executive order and revising or repealing federal rules perceived as hindering innovationwhitehouse.gov. Simultaneously, it calls for increasing energy generation capacity and streamlining permitting to build data centres and semiconductor fabswhitehouse.gov, and for strengthening export controls on advanced AI chips to counter Chinawhitehouse.gov. These policies will shape diplomatic relations, supply chains and the availability of compute infrastructure in 2026.
2. Technology and digital transformation
2.1 Generative AI and agentic AI
By 2026 generative AI will shift from experimentation to enterprise‑grade deployment. McKinsey estimates generative AI could unlock US$2.6–4.4 trillion in annual value across industries, especially through retrieval‑augmented generation and multi‑modal integrationsimplilearn.com. Organisations will embed generative AI into core workflows, emphasising fine‑tuning with proprietary data and human‑in‑the‑loop controlssimplilearn.com. Agentic AI—systems capable of reasoning, planning and acting autonomously—are expected to replace simple assistants; Research Nester projects the autonomous‑AI market to reach US$11.79 billion by 2026 with a compound annual growth rate above 40 %simplilearn.com. These AI agents can handle end‑to‑end tasks such as procurement or customer support, reducing errors and speeding decision makingsimplilearn.com.
2.2 AI governance and regulation
The EU AI Act adopts a risk‑based approach, prohibiting unacceptable AI practices (e.g., social‑score systems) and imposing strict obligations on high‑risk AI systems (risk management, high‑quality data, transparency and human oversight)digital-strategy.ec.europa.eu. The act entered into force on 1 August 2024, with prohibitions and AI literacy rules applicable from February 2025; rules for general‑purpose AI models apply from 2 August 2025, most obligations take effect 2 August 2026, and high‑risk systems embedded in regulated products have an extended transition until 2 August 2027digital-strategy.ec.europa.eukpmg.com. Organisations may be both providers and users of high‑risk systems; they must implement risk management, maintain data quality and ensure human oversightkpmg.com. General‑purpose AI models must provide technical documentation and training data summaries; high‑impact models face stricter obligationskpmg.com. Non‑compliance could result in penalties of up to 7 % of global revenue.
In the U.S., no federal AI law exists, but more than 1,080 AI‑related bills were introduced across all 50 states in 2025, and only 118 were enacted (11 % passage rate). Deepfake bills gained traction (301 bills introduced, 68 enacted), and some states passed digital‑replica laws to protect individuals’ likenessrila.org. Colorado postponed its comprehensive AI law until June 30 2026rila.org. Divergent state approaches create a patchwork of rules; algorithmic rent‑setting laws and data‑privacy bills further complicate compliancerila.org. Meanwhile, the U.S. AI Action Plan proposes deregulatory measures that may conflict with state regulationwhitehouse.gov.
2.3 Low‑code development and human–AI collaboration
Gartner predicts the low‑code development market will reach US$44.5 billion by 2026, enabling 80 % of technology products to be built by non‑IT professionalssimplilearn.com. AI‑assisted development and low‑code platforms will democratise software creation. The market for AI productivity tools (collaboration/co‑creation) is projected to reach US$36.35 billion by 2030 with a CAGR of 26.7 %, reflecting the shift toward human–AI collaborationsimplilearn.com. These tools will enable knowledge workers to partner with AI in creative tasks, emphasising human oversight and ethical design.
2.4 Digital divides and inclusion
Despite technological advances, digital divides persist across geography, education, age, income and firm size. The OECD notes that high‑quality, affordable broadband connectivity remains uneven; connectivity gaps remain between urban and rural areasoecd.org. Smaller firms lag large firms in adopting digital technologies, contributing to a “productivity paradox” where technological progress does not translate into broad productivity gainsoecd.org. Demographic divides persist: internet usage varies by age and education, and the difference in internet use between the highest and lowest income quintiles is 12 percentage pointsoecd.org. Governments must invest in skills and inclusive online services to ensure digital transformation benefits all citizensoecd.org.
3. Energy, climate and sustainability
3.1 Energy transition and investment
The International Energy Agency (IEA) projects global energy investment in 2025 to reach US$3.3 trillion, of which US$2.2 trillion (two‑thirds) will go to renewables, nuclear, grids, storage, low‑emissions fuels, efficiency and electrification—twice the amount going to fossil fuelsiea.blob.core.windows.net. Investment in low‑emissions power generation has nearly doubled in five years, led by solar PV; solar investment alone is expected to reach US$450 billion in 2025iea.blob.core.windows.net. Natural‑gas and LNG projects will undergo large expansions between 2026 and 2028; U.S., Qatari and Canadian projects under construction could almost double U.S. LNG export capacityiea.blob.core.windows.net. These investments signal both rapid decarbonisation and continued reliance on gas as a transition fuel.
3.2 Climate adaptation and resilience
The World Meteorological Organization warns there is an 80 % chance that at least one year between 2025 and 2029 will exceed 2024 as the warmest on record and an 86 % chance that at least one year will be more than 1.5 °C above pre‑industrial levelswmo.int. The five‑year average warming has a 70 % chance of exceeding 1.5 °C, with global mean temperature projected to be 1.2–1.9 °C above the 1850–1900 averagewmo.int. Extreme heat, heavy rainfall and drought will become more frequent, increasing the need for adaptation. The OECD emphasises that governments should pair net‑zero strategies with robust climate adaptation policies. It recommends a four‑step policymaking cycle: conducting climate‑risk assessments; designing National Adaptation Strategies and Plans; implementing actions; and measuring and evaluating outcomesoecd.org. Food systems are particularly vulnerable; governments should support innovation and reform price supports to increase crop and livestock resilienceoecd.org. Adaptation must be place‑based, addressing regional disparities and empowering subnational authorities with resources and capacityoecd.org.
3.3 Sustainability, ESG and corporate reporting
Sustainability will move from voluntary to mandatory. The EU’s Corporate Sustainability Reporting Directive (CSRD) requires large companies and listed SMEs to publish 2025 data starting in 2026; this double‑materiality approach covers environmental and social impacts. Analysts expect the term “ESG” to fade as companies integrate sustainability into risk management and core strategy; robust governance will be critical for stress‑testing data and enhancing investor confidencethomsonreuters.comthomsonreuters.com. Firms must strengthen supply‑chain due diligence; anti‑greenwashing litigation is expected to grow under CSRD’s double‑materiality requirementthomsonreuters.com. The article warns that anti‑ESG sentiment may spur U.S. federal measures to roll back diversity, equity & inclusion and renewable‑energy incentives, leaving state and local governments to enact carbon disclosure and building‑performance standardsthomsonreuters.com.
Sustainability trends also include circular‑economy principles, regenerative design, and water conservation. Governments, regulators and investors are tightening reporting standards (CSRD, ISSB), and companies that fail to show measurable progress risk legal, investor and reputational consequenceshyperisland.com. Supply‑chain transparency will be non‑negotiable; companies like Fairphone and Patagonia already publish detailed supplier data, and failure to meet expectations could lead to penalties and brand damagehyperisland.com. The rapidly growing demand for green skills—job postings requiring such skills have grown by more than 8 % annually—creates an ESG skills gap; businesses must invest in upskilling workers for sustainability roleshyperisland.com.
4. Workforce and social implications
4.1 Changing job landscape and human skills
Automation and AI will reshape the labour market by 2026. AI workflows will enable supply chains and manufacturing processes to automatically adjust to demand and material availabilityforbes.com. Forbes notes that entry‑level and clerical roles will be cut, while growth will occur in nursing, care, construction, education and technologyforbes.com. Human‑centric skills—communication, empathy, creativity and leadership—will become more valuable as tasks that require judgment and interpersonal interaction cannot be automatedforbes.com. Employers will adopt AI‑driven people‑management tools to make recruitment and HR decisions, but they must address transparency and fairness concernsforbes.com.
4.2 Employee wellbeing and mental health
Mental health will be a critical focus. Surveys show that roughly half of U.S. workers report moderate to severe burnout and anxiety; financial stress is high and work–life boundaries remain blurredgopivotsolutions.com. Employees now value flexibility, childcare support and mental‑health days over traditional perksgopivotsolutions.com. Employers will need to move beyond standard paid‑time‑off and employee‑assistance programmes to holistic wellbeing initiatives—resilience workshops, mental‑health first‑aiders, leadership training, supportive cultures and data‑driven analyticsgopivotsolutions.comwellbeingpeople.com. Burnout prevention will become a business priority; in the UK, sickness absence reached a 15‑year high in 2024 and mental‑health issues cost employers £56 billion annually. Employers may pilot no‑meeting days and four‑day workweeks to mitigate burnoutwellbeingpeople.com. Financial wellbeing programmes—including education, debt advice and flexible pay—are needed because nearly 60 % of employees report that money worries affect performancewellbeingpeople.com. Inclusive wellbeing initiatives will support employees through menopause, caregiving and neurodiversity; flexible schedules help retain talentwellbeingpeople.com. Organisations will collect data to evaluate wellbeing programmes and demonstrate return on investmentwellbeingpeople.com.
4.3 Remote work and connected ecosystems
Hybrid and remote work models adopted during the pandemic remain entrenched. Forbes describes workplaces as connected ecosystems—networks of tools, communication channels and physical spaces that support employees anywhere, offering continuity and better work–life balanceforbes.com. Flexible ecosystems will allow companies to recruit talent globally but also require investment in cybersecurity, collaborative software and digital infrastructure. The shift to “soft retirement”—older workers gradually reducing hours and offering consulting or part‑time services—will help address labour shortages and leverage experienceforbes.com.
4.4 Digital inclusion and skills
Persistent digital divides hinder equitable access to emerging opportunities. Governments and businesses must invest in digital skills training, connectivity and inclusive design. Without targeted interventions, AI adoption could widen the productivity gap between large and small firmsoecd.org. Demographic differences in internet usage and digital skills may exacerbate social inequalityoecd.org. At the same time, the ESG skills gap means that demand for green and sustainability expertise outstrips supplyhyperisland.com. Collaboration between educational institutions, employers and governments will be essential to develop curricula and training programmes that prepare workers for climate‑ and AI‑driven jobs.
5. Implications for governments
- Regulatory leadership – Governments will need to balance innovation with risk mitigation. The EU AI Act provides a blueprint for risk‑based regulation with clear timelines and obligations for high‑risk systemsdigital-strategy.ec.europa.eudigital-strategy.ec.europa.eu. Coordination among national regulators, standard‑setting bodies and industry will be vital to implement the act and manage cross‑border compliance. U.S. policymakers face a fragmented patchwork of state laws; federal legislation could harmonise standards but may be constrained by deregulatory agendas.
- Infrastructure and energy policy – Meeting the computational demands of AI will require substantial investment in electricity generation, grid upgrades and data‑centre infrastructurewhitehouse.gov. Policymakers must streamline permitting (e.g., by expanding FAST‑41 and creating NEPA exclusions)whitehouse.gov, develop grids that integrate renewables and ensure reliability, and promote domestic manufacturing of semiconductorswhitehouse.gov. Coordination with climate goals is essential to avoid locking in fossil‑fuel dependence.
- Climate adaptation and resilience – National adaptation strategies should integrate risk assessments, planning, implementation and evaluationoecd.org. Policymakers must support innovation in climate‑resilient agriculture and infrastructureoecd.org, empower local authorities with resourcesoecd.org, and ensure climate‑finance flows to vulnerable regions. Cross‑border cooperation on climate risk and adaptation will be increasingly important as extreme events intensifywmo.int.
- Social policy and workforce support – Governments must invest in mental health services, financial‑wellbeing programmes and inclusive labour policies to counter rising burnout and inequalitygopivotsolutions.comwellbeingpeople.com. Public funding for reskilling, particularly in AI, digital and green competencies, will be criticalbajastartalent.com. Policies that support flexible work arrangements and soft retirement can help manage demographic shifts and labour shortagesforbes.comforbes.com.
6. Implications for businesses
- Embedding AI and digital technologies – Companies that invest in generative and agentic AI will gain competitive advantages in efficiency and innovation. Businesses should adopt governance frameworks to ensure compliance with the EU AI Act, including risk management, data quality and human oversightkpmg.com. Implementing model registries, fairness audits and explainability will become standard practicesimplilearn.com. Organisations need to prepare for state‑level AI laws in the U.S. and manage the risk of patchwork regulationrila.org.
- Supply‑chain resilience and sustainability – Firms must diversify supply chains to mitigate tariffs and geopolitical risks. Clean‑energy investment and decarbonisation strategies will not only meet regulatory requirements but also reduce exposure to volatile fossil‑fuel prices. Transparent supply chains and circular‑economy practices will build trust and satisfy investors and consumershyperisland.com. Companies should prepare for more stringent climate and sustainability reporting (CSRD, ISSB)hyperisland.com and address the risk of greenwashing litigationthomsonreuters.com.
- Human capital and culture – Employers will need to upskill workers for AI‑enabled workflows, emphasising soft skills such as communication, empathy and creativityforbes.com. They should design hybrid work policies that support productivity and inclusionforbes.com. Holistic wellbeing programmes—including mental‑health support, burnout prevention, financial wellbeing and inclusive benefits—will be essential to attract and retain talentgopivotsolutions.comwellbeingpeople.com. Data‑driven people‑management tools must be implemented carefully to ensure fairness and transparencyforbes.com.
- Strategic governance and risk management – Boards and C‑suite executives will be accountable for sustainability and AI governance. They must integrate ESG considerations into corporate strategy and align with international standardsthomsonreuters.com. Robust governance will enhance resilience to political and climate shocksthomsonreuters.com. Companies should allocate resources to monitor regulatory developments (e.g., EU AI Act, state AI laws) and engage with policymakers to shape practical rules.
7. Implications for society
- Equity and inclusion – The digital transformation risks widening gaps between those who can access and use technology and those who cannot. Policies and community programmes must address disparities in broadband access, digital skills and AI adoptionoecd.orgoecd.org. Educational systems must equip young people with AI literacy and sustainability knowledge while supporting lifelong learning for older workers.
- Mental health and wellbeing – Widespread burnout, anxiety and financial stress call for a collective response. Employers, governments, healthcare providers and communities must collaborate to destigmatise mental health, increase access to care and promote resiliencegopivotsolutions.comwellbeingpeople.com. Inclusive wellbeing programmes that address menopause, caregiving and neurodiversity will help ensure that all workers thrivewellbeingpeople.com.
- Climate resilience and community adaptation – Communities will experience more frequent extreme weather events. Societal resilience depends on local adaptation initiatives, such as heatwave preparedness, flood‑resistant infrastructure and disaster‑response planning. Individuals may need to adapt lifestyles, diets and consumption patterns to reduce emissions and build resilience. Citizen engagement is critical to ensure that adaptation plans reflect local needs and foster social cohesionoecd.org.
- Trust in institutions and technology – Rapid technological change and polarised politics could erode trust in institutions. Transparent AI governance, effective communication about climate policies and inclusive decision‑making processes are necessary to maintain social trust. The integration of AI into public services should prioritise accountability, privacy and fairnesskpmg.com.
Conclusion
2026 will be a year of balancing opportunities and risks. Technological advances such as generative and agentic AI promise productivity gains and new services, yet require robust regulation and ethical practices. The energy transition will accelerate investment in renewables and infrastructure, but climate risks and adaptation challenges will intensify. Governments must craft policies that promote innovation, protect citizens’ rights and prepare for extreme weather; businesses must integrate AI and sustainability into strategy while safeguarding employee wellbeing; society must address digital divides, mental health and climate resilience. Proactive, coordinated actions across sectors will be essential to navigate the complexities of 2026 and harness its potential for inclusive growth.
