Link to IWP's Global Investment Outlook (PDF)

Global markets have delivered strong returns over the past year, supported by resilient economic growth and continued momentum in AI-driven investment, while policy uncertainty and inflation risks remain key watchpoints heading into 2026. In this month's update, Cam and Naasha from Willis Towers Watson review portfolio performance and outline the global economic and asset class outlook:

• Investment portfolios have continued to outperform their long-term objectives across defensive, balanced and growth strategies, reflecting disciplined asset allocation and low-cost implementation
• U.S. growth remained more resilient than expected in 2025, driven by strong consumer spending and significant AI-related capital investment, with 2026 growth forecast to remain above trend
• Inflation in the U.S. is expected to stay elevated but manageable, with only limited scope for further rate cuts as the Federal Reserve balances growth and price pressure
• European growth has also proven steady despite trade tensions, with fiscal expansion and stable inflation supporting a constructive outlook for equities
• In Australia, economic growth has improved, though inflation has re-accelerated, prompting a recent rate hike; the RBA is expected to remain cautious and data-dependent in 2026
• China met its 5% growth target in 2025, successfully navigating trade tensions, with technology investment and domestic consumption key to its 2026 outlook
• Global equities remain the preferred asset class in the short term, supported by earnings growth, fiscal expansion and ongoing AI investment, while government bonds continue to play an important diversification role
• Credit markets appear less attractive in the near term due to tight spreads, and currency movements have seen the Australian dollar strengthen against a softer U.S. dollar

Overall, the message remains clear: despite heightened policy and geopolitical uncertainty, markets have shown resilience. A diversified, long-term investment approach remains central to navigating volatility while positioning portfolios for continued global growth opportunities.

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