Regional struggles, global pressures and the increasingly wide reach of new technology are set, once again, to alter how each nation navigates the world economy’s choppy waters in 2026.

This pessimism was aptly summarized in the International Monetary Fund’s (IMF) latest World Economic Outlook. Subtitled “Global Economy in Flux, Prospects Remain Dim,” the organization slightly revised growth projections upward because of a less volatile and unclear trading landscape but nevertheless maintained its forecasts of a slowdown compared with recent years.

“Uncertainty about the stability and trajectory of the global economy remains acute,” the report read, adding that policy changes, “financial market fragilities” and structural pressure on global labor forces mean risks remain “tilted to the downside.”

Which Countries Are At Risk Of A Recession In 2026?United States

President Donald Trump’s “Liberation Day” tariff announcements in April sent markets into a tailspin and businesses scrambling to stockpile goods before the duties went into effect while raising the specter of a recession only months into his second term. Fears worsened when advance estimates showed the economy contracted in the first three months of 2025 but have since been somewhat tempered thanks to strong GDP growth in the second and third quarters.

However, beyond immediate policy shocks such as tariffs—the effects of which will continue to be felt in 2026—experts have pointed to other underlying corrosives that could tip America toward a downturn next year.

“Labor markets here are atrophying,” financial analyst Gary Shilling told Newsweek, noting that a slowdown in hiring has combined with a worrying increase in job cuts.

Shilling, among the first experts to raise concerns about the housing bubble that preceded the Great Recession that began in late 2007, went on to say that U.S. consumers are “up to their eyeballs in debt” and described the current economy as a “flattened-down environment” that any kind of shock could push into crisis, most notably the AI bubble bursting.

AI stocks now account for one-third of the S&P 500 in terms of overall market cap, per Bank of England estimates, and investments in the technology made up more than 90 percent of GDP growth in the first half of 2025, according to Harvard economist Jason Furman. As a result, a sharp correction would ripple through the entire economy and impact all of its constituents.

Dean Baker, economist and co-founder of the Center for Economic and Policy Research (CEPR), told Newsweek: “The biggest risk, first and foremost to the U.S. economy, is a collapse of the AI bubble. The loss of trillions of dollars in stock wealth will cause consumption to fall.

“Also, since there is heavy leverage associated with both AI and crypto we will almost certainly see some major stress in the financial system. There will be secondary effects in Europe and elsewhere in the world, but the U.S. will be by far the biggest victim of a collapse.”

Europe and U.K.

Many of Europe’s largest economies are projected to grow at a slower pace that the 3.1 percent global rate outlined by the IMF, raising the odds that they could experience the two negative quarters of GDP contraction that fulfils the common, technical definition of a recession.

These include France (0.9 percent), Germany 0.9 (percent) and Italy (0.8 percent), but forecasts for the eurozone are sluggish as the block battles elevated debt levels, trade policy uncertainties as well as the ongoing fallout from Russia’s war with Ukraine.

For the U.K.—less exposed to tariffs thanks to a deal agreed to with Trump in May—the IMF trimmed 2026 growth forecast to 1.3 percent from 1.4 percent in July.

“The European countries are mostly looking at slow growth in 2026,” said Baker, adding that “some serious bad news, such as an obsession with fighting deficits, could push them into recession.”

However, he said any sort of settlement in the Ukraine war “is likely to be a positive” as efforts to rebuild the country could provide a “substantial boost” to continent-wide demand.

China

“China’s prospects remain weak,” the IMF wrote in its report. “More than four years after the property bubble burst, the sector has still not been put on a firm footing. Real estate investment continues to shrink while the economy teeters on the verge of a debt-deflation cycle.”

Beyond its ailing housing market, questions have emerged about how long the country can remain reliant on manufacturing exports, especially if U.S.-bound shipments continue to decline. Beijing has been heavily subsidizing its manufacturing sector without successfully stimulating much growth in domestic demand.

Shilling said that the Chinese economy appears “very vulnerable” going into 2026, given its “depressed” property sector and the fact that government efforts to boost consumption and reverse a deflationary slide have yet to show “any great signs of stimulating consumer activity.”

However, he does not expect the country’s economy to collapse anytime soon, and the IMF is projecting GDP growth of 4.2 percent in 2026.

Russia

Russia has for years labored under a web of sanctions imposed following its invasion of Ukraine in February 2022. But, a war-driven surge in public spending, coupled with the enduring appeal of its energy exports, fueled significant economic expansion in 2023 and 2024 while prompting uneasy questions about whether Moscow could prove ultimately resilient to any Western attempts at financial disarmament.

But growth slowed sharply this year, reaching only 0.6 percent on an annual basis in the third quarter, according to its main statistical agency, in line with forecasts from the IMF and the country’s central bank.

Looking ahead to next year, the IMF expects growth to remain modest at about 1 percent. But others believe 2026 might be the year Russia finally reaches its breaking point, as wartime borrowing catches up with the economy, new sanctions further constrain expansion, and structural vulnerabilities in the financial sector push the country into a full-scale downturn.