Goldman Sachs expects the global economy to improve in 2027. But there is a problem for investors: interest rates could rise further before the recovery gains momentum.
In its latest economic outlook, the Wall Street bank forecasts global growth of 2.8% next year, slightly above its 2026 projection.
The improvement depends heavily on two factors:
- Falling energy prices
- Continued investment in artificial intelligence.
Goldman expects Brent crude to fall to $78 a barrel by the end of 2027 as Middle East supplies adjust following this year’s energy shock.
Cheaper fuel could ease pressure on businesses and households, supporting economic growth.
Meanwhile, global AI investment is projected to surge from $1.1 trillion this year to $1.8 trillion in 2027, potentially adding 0.4 percentage points to global GDP growth.
“We expect another year of solid but unremarkable GDP growth in 2027,” Goldman chief economist Jan Hatzius wrote.
Why Investors May Face a Difficult 2027
The biggest complication comes from the Federal Reserve.
Goldman now expects two more US interest rate hikes, in December 2026 and March 2027. Its first projected rate cut would arrive in December 2027.
That means borrowing costs could remain elevated for much of next year, putting pressure on companies and potentially weighing on expensive technology stocks.
Goldman expects US core inflation to fall from 3.2% to 2.4% by the end of 2027, eventually allowing the Fed to ease policy.
However, the forecast carries significant risks:
- Another escalation in the Iran war could send oil prices soaring again.
- Europe could face continued pressure from delayed energy costs, while weaker AI investment would remove a major source of global growth.
For stock market investors, the outlook hinges on whether cheaper energy and AI spending can support corporate earnings while interest rates remain high.
If either source of growth weakens, Goldman’s already modest recovery forecast could face serious pressure.
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