Erste Group: 2026 market outlook highlights global opportunities amid volatility

Erste Group has presented its capital market outlook for 2026 – a year that, despite geopolitical tensions and structural shifts, is expected to be marked by solid growth,
declining inflation, and significant investment opportunities.

The newly published “Erste Insights 2026” report from the Group Chief Investment Office of Erste Group – prepared in collaboration with experts from Erste Group Research and Erste Asset Management – provides a macroeconomic outlook for the year 2026, highlights key structural trends, and proposes sensible asset allocations and practical investment strategies. The report’s aim is to help investors cut through the noise, gain clarity amid uncertainty and identify opportunities even in a complex environment.

“Markets will remain volatile in 2026. Ongoing political uncertainties, technological change, and structural transformations will continue to challenge investors. However, with the right insights, these challenges can also be seen as opportunities,” said Rainer Hauser, chief investment officer of Erste Group.” Investing in securities involves both opportunities and risks.

Euro Area: Growth remains moderate, CEE remains Europe’s growth engine

Following the [initial] tariff dispute with the United States, economic momentum in the euro area is normalising again. For 2026, Erste Group Research expects gross domestic product (GDP) growth of 1.1% in the euro area. Private consumption—supported in particular by rising real wages and a strong labour market—is set to remain an important pillar of growth. Inflation in the euro area is expected to ease further, to 1.8%. The research experts at Erste Group anticipate that the European Central Bank will likely keep the deposit rate at 2.0%, while increased government spending—particularly in Germany—should support the economic cycle.

Central and Eastern Europe (CEE) continues to grow significantly faster than the euro area. For 2026, average GDP growth of 2.7% is projected for the CEE region. Key drivers include strong consumer demand, real wage increases, and substantial EU investment programmes such as the Recovery and Resilience Facility and the SAFE programme to strengthen Europe’s defence industry. Inflation is falling but remains elevated in some CEE countries, such as Romania. Most central banks in the region are expected to enter another interest‑rate‑cutting cycle in 2026.

United States: Rising inflation; China: Growth remains robust

The US economy slowed significantly in the first half of 2025. Erste Group Research now expects US GDP growth of 1.8% in 2026. Inflation is likely to reach 2.8% this year and 2.9% next year. The Federal Reserve is expected to cut rates twice in 2026, but may need to reverse course later due to persistent inflation.

China continues to post robust growth despite the tariff conflict, though momentum is expected to slow to 4.2% in 2026. The Chinese economy remains heavily investment‑driven, while the government seeks to strengthen consumer demand. India continues to demonstrate exceptional momentum, posting 8.2% growth in the third quarter of 2025—driven by rising real incomes and strong domestic demand. Inflation remains low, allowing for monetary easing.

“Overall, we expect only moderate global GDP growth in 2026—except in India and CEE. Unresolved geopolitical conflicts remain a major challenge for markets,” said Fritz Mostböck, head of group research at Erste Group.”

Key trends and investment stories for 2026

Artificial Intelligence (AI) - AI remains a long‑term market driver. Its development continues in waves—alternating between phases of enthusiasm and consolidation. Erste Group views AI as a potentially transformative technology on par with electricity or the internet. Investors should monitor both established leaders and emerging challengers.

Demographics - Ageing societies, shrinking workforces, and global demographic imbalances will shape long‑term growth, inflation and asset prices. Opportunities arise in such areas as the “grey economy,” the healthcare and care sectors, and in countries with growing populations.

(De-)Globalisation - Despite political rhetoric, global trade continues to expand—albeit at a slower pace. Nearshoring and “friendshoring” are creating new winners, particularly in the CEE region. Global supply chains remain a strategic issue for companies and investors.

US Politics - President Trump’s second term continues to create uncertainty. Markets in 2026 will especially watch the Fed appointments and the midterm elections, which will determine the Trump administration’s political room for manoeuvre.

Europe - Europe is, in Erste Group’s view, “doubly undervalued”—due to weak sentiment and comparatively attractive price-to-earnings (P/E) valuations—and therefore offers compelling opportunities. Small caps, value stocks and financials are expected to be particularly relevant in the European context.

Cryptocurrencies - Cryptocurrencies benefit from political support in the US and rising demand, yet lack a robust intrinsic value—making them attractive but highly risky. For this reason, Erste Group does not issue crypto recommendations.

Overall Portfolio 2026: Robust, broadly diversified and flexible

Erste Group’s proposed overall portfolio for 2026 emphasises wide diversification across asset classes, regions, and sectors to reduce volatility and selectively capture opportunities.

Equities—including those from emerging markets—serve as growth drivers, with a focus on quality, attractive valuations and structural trends. Government and corporate bonds, as well as emerging‑market bonds in local currency, provide stability and additional return potential.
Erste Group also recommends commodities—particularly gold—and alternative investments.Keeping sufficient liquidity enhances portfolio resilience and enables flexibility in responding to market changes.

“The motto for 2026 is: Risk On, but not All In. Economic growth and falling key interest rates in the US are opening up opportunities—those who combine quality with breadth will have the advantage,” said Gerold Permoser, chief investment officer of Erste Asset Management.

Re-disseminated by Wealth and Society