Forecasts for 2026: how to avoid an annus horribilis

A sober analysis of events, probable positive and negative developments in the new year for the world, the US, the EU, and Ukraine, and the conditions for their realization, without all-encompassing scientific “futurology” and illusions.

4 January, 2026

World

Monetary Policy

Governance and Regulations

Politics & Law

Yaroslav Romanchuk

The future is objectively uncertain and unknown, but such a world order does not suit humans. They want to know in advance and faster than others where to lay their straw, where not to go, with whom not to deal, where to direct their resources, and what best to make.

This has been the case throughout human history. Kings and emperors, military leaders and presidents, company executives and bankers have all wanted to know what the future holds. That is why legends about Pythia, Cassandra, Nostradamus, Vanga, and Messing continue to intrigue us to this day. The high demand for “fortune-telling” services has led to a wide range of offerings. There are now more fortune-tellers than fast food varieties. And if people are willing to pay, then (as the market demands) there will always be those who are ready to offer these services.

The supply and demand system operates according to market laws, the rules of the invisible hand of the market, without government intervention.

There are many futurologists and other experts who claim to have knowledge of the future in its various aspects. Astrologers, tarot readers, clairvoyants, psychics, palmists, magicians—there is something for everyone on the market. It wouldn’t be appropriate for top leaders in politics, economics, and finance to rely on the same future-prediction services as ordinary people. Instead, a specialized market has grown to meet their demands and budgets: futurists offering “foresights,” “forecasts,” “insights,” and “anticipations,” created by analysts of all kinds—experts in macroeconomic and multisystem modeling, among others. Their “coffee grounds” or Tarot system is actually a complex mathematical model with numerous variables, extensive lists of assumptions, and various factors classified as “other levels.” Our eyes are dazzled by symbols and signs of higher mathematics, which in recent years have been actively fed into artificial intelligence on super-powerful computers. Owners and managers of powerful banks, funds, corporations, and governments pay big money for such forecasts and predictions. For them, packaging is critically important, as are cumbersome motion presentations using modern, breakthrough scientific methods and tools. Accordingly, the price tag for such services is steep.

Such marketing of banal fortune-telling greatly appealed to theorists, ideologists, and beneficiaries of the state, primarily the syndicate of “VIP administrators and consumers of other people's (our tax) money.” They understood the great power of persuasion of fortune-telling wrapped up in “scientific futurology” to increase the volume of state programs and projects, optimize income distribution, ensure the inclusiveness of economic growth, and achieve a balance between society and nature, society and business, and business and the state. Anthropologists, sociologists, historians, cultural experts, psychologists, physicists, and ecologists have joined in the great game of fortune-telling and predicting the future, taking their share of the pie.

The fruits of fortune-telling in scientific or interesting futurology packaging are eagerly bought by the media, organizers of various international forums and conferences, and business events, creating an entire industry based on the illusion of controlling the future. In a world of postmodernism, post-truth, and formalized mysticism, few are willing to admit that futurology, no matter how you package it, remains “bullshitology,” ordinary folk divination in an attempt to predict the future.

But since it is customary to make predictions at the beginning of a new year, let's try (not without a touch of irony), as well as interesting geopolitics and macroeconomics, to make a prediction for 2026. However, our forecasts take into account the nature of human activity, the laws of praxeology, and respect for the laws of the universe, which make the future of the world—and of every individual—by definition uncertain. It is within these boundaries that the fruits of our imagination, the content of our judgments, and the limits of our assessments lie.

The global economy in 2026

Forecast. 2026 will be tense and costly for 99% of the population, but delicious and profitable for 1%. How?
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In 2025, there were 2,919 billionaires in the world (according to estimates by Swiss bank UBS), whose wealth amounted to $15.78 trillion. As of mid-2025, there were approximately 41.3 million millionaires worldwide (according to Altrata's estimate).

Forecast. The global economy will grow by more than 3% of GDP. Under what conditions?
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If the Federal Reserve System (Fed) lowers the refinancing rate from 3.5% to 2.5%, if, following Donald Trump's promises, at least $5 trillion in foreign direct investment comes to the US, and the US administration manages to ease trade tensions with China and the European Union, then against the backdrop of economic tensions in the European Union and sluggish growth in heavily regulated India.

The result of this scenario would be the enrichment of 1% of the world's population, and Elon Musk, with a successful PR campaign and the support of MAGA's main sponsors, could break through the $1 trillion personal wealth ceiling. At the same time, the size of the middle class and its assets will gradually decline due to taxes, regulatory restrictions, and unequal conditions imposed by the VIP bureaucracy that controls state budgets.

Forecast. Government debt will gradually increase. There is a high probability of sovereign defaults in poor countries and a downgrade in the investment ratings of rich countries.
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Global debt (government, commercial organizations, and households) will approach $400 trillion in 2026, or more than 330% of global GDP. As debt burdens grow, hatred toward creditors, wealthy individuals, and rich countries will increase. In the event of "black swans," the world's major central banks (the Fed, the ECB, the Bank of England, the Bank of Japan, and the People's Bank of China) will certainly turn on the money printing presses to plug the holes in the balance sheets of those commercial structures that are considered systemically important, strategically important, and "too big/important to fail." Small and medium-sized businesses, which employ the majority of the world's population, are not among the "lucky ones".

Forecast. Inflation risks will increase significantly. But they won't tell us about it.
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The methodology for calculating inflation is a huge field for potential manipulation. VIP officials, in partnership with econometricians and futurologists-modelers, will invent a new indicator to replace the consumer price index, adjusted for DEI and ESG, and in America, they will replace it, for example, with the “Trump coefficient”.

Forecast. Global trade may recover from the shock of the global tariff war. How?
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International corporations, the main players in global value chains, will find special regimes, "loopholes" to penetrate even the US market through jurisdictions that Donald Trump and his administration are particularly fond of.

Forecast. Global logistics companies will increasingly use drones and robots.
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China will not want to use weapons – "a ban on the export of rare earth metals" – to improve access to markets in various countries.

The appearance of political "black swans" and other predatory birds of various colors and characteristics cannot be ruled out.

Forecast. A possible "black swan" could be the Republican Party losing its majority in both houses of Congress, followed by a political crisis in the US.
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Under this scenario, D. Trump, to the delight of geopolitical ornithologists, could unleash such a number of predatory disruptor birds that the timid hares of the stock market might get scared. Such an "enema" for stock markets could trigger bankruptcies of banks, funds, and even corporations, turn real estate markets upside down, and bring the global economy rapidly closer to zero growth. Such a crisis will not only affect America. If the US starts sneezing, the rest of the world will catch pneumonia.

The collapse of the stock market, along with the bursting of the artificial intelligence bubble, threatens a financial crisis that will surpass previous ones in scale, slow global economic growth, and reduce the number of millionaires and billionaires.
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An important event will be the FIFA World Cup in the United States and Canada. Such a large gathering of people will likely attract the attention not only of football fans but also of terrorists. Their activity in 2026 could affect not only the plans of the organizers of individual matches and events but also global security.

The European Union in 2026: a good and a bad scenario

In a positive scenario Next year, the European Union will reaffirm its Western identity, values of freedom and capitalism at Davos and the Munich Security Conference, and will significantly accelerate the processes of deregulation and debureaucratization. Key adjustments will be made to the European Commission's budget, with a significant increase in military spending, including on weapons. This will not be achieved through new taxes, but by cutting funding for the "green" agenda and subsidies to powerful lobby groups that have been living off taxpayers for decades. In light of the free trade agreement between the EU and MERCOSUR countries, we can expect an increase in protests by European farmers and agricultural lobbyists. Therefore, the likelihood of seeing piles of manure outside parliament and government buildings will be very high.

A real battle is about to unfold in Brussels over the EU budget for the next budget cycle, 2028-2034. It is not simply called a budget, but a multiannual financial framework (MFF).

The preliminary EU budget for this period will amount to €2 trillion, or 1.26% of the average annual gross national income (GNI) of EU countries for the period 2024-2028. The battle for European taxpayers' money will pit old lobbyists and representatives of EU reformers, supporters of European independence from the US, defense and security, and environmental "green" structures that continue to "push" and feed Europeans a destructive green agenda.

In December 2025, Bruegel, one of Brussels' most authoritative think tanks, called the past year annus horribilis, referring to problems in the climate, trade, and foreign policy agendas.

Forecast. With a high degree of probability, 2026 will be worse for Europe than 2025 if the old forces of the EU, focused on federalization, continue to push their old priorities through protectionism, tax and regulatory extremism, and increased debt.
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When, at the end of 2025, Brussels think tanks serving the European Commission write that the European Union needs to create international coalitions of climate and nature conservation advocates, we should not expect any profound changes from the EU in 2026. "Climate consciousness" and the resulting comprehensive state interventionism have come into sharp conflict with common sense, fiscal responsibility, and the imperatives of increasing competitiveness. After all, security risks and challenges are intensifying. The migrant problem and failed multiculturalism are at a breaking point.

Forecast. In 2026, there will be a lot of social unrest in Europe, with periodic outbreaks of protests of varying content and intensity.
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Europe has not yet fully realized that it:

lost the competitive battle to the Chinese automotive industry and manufacturers of various electronics;
lost to America in the fields of IT, communications technology, and artificial intelligence;
loses out to agricultural producers in MERCOSUR countries and Ukraine, especially in terms of agricultural raw materials.

What are the options for avoiding a crisis? The EU closes itself off and becomes Fortress Europe, attempting to preserve its so-called social achievements, or it challenges global competition, submitting to the laws of open competition and technological innovation.

Forecast. The risk of bankruptcy among financial institutions and companies representing traditional industries will increase. This will lead to rising unemployment and, consequently, increased pressure on already strained public finances.
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The big question is whether parties and forces advocating fiscal responsibility and the elimination of Leviathan (big government) will emerge on the European political scene. The spirit of meaningful reform in EU countries could be bolstered, for example, by a victory for Germany, France, or Spain in the 2026 FIFA World Cup.

One would very much like to see a complete reboot of the Davos Forum and the creation of a strong international platform for freedom and capitalism in Europe, but so far, together with mainstream political parties, we are witnessing a rise in collectivist-populist movements (anti-Semitism, anti-immigrant, anti-American, anti-Ukrainian, anti-wealth).

Forecast. In 2026, all of Europe's wounds and illnesses will worsen, testing its immunity and capacity for existential transformation.
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Ukraine in 2026: between the specter of the market and the triumph of Leviathan

In a positive scenario, President Zelensky should dismiss the entire economic bloc of the government immediately after the New Year holidays, and remove the flag of Ukrainian Marxism of D. Hetmantsev, the banner of Ukrainian fiscalism of S. Marchenko, the poster of the Ukrainian dirigisme of D. Natalukha, and the shield of the Ukrainian monetary and credit syndicate A. Pyshny, as well as the symbol of the absurdity of the Ukrainian Cabinet of Ministers – Prime Minister Y. Svyrydenko. Instead, a team of reformers, supporters of the free market, true capitalism, and Western values will be formed. It includes authoritative Ukrainian economists, lawyers, and professionals in the field of public administration who work in the "small state" model.

Unfortunately, we cannot predict even a 1% chance of such a scenario; in 2026, it is highly unlikely.

Forecast. With a high degree of probability, Ukraine will repeat 2025, i.e., continue living in the context of the usual nomenclature-commercial schematism that is destructive for Ukraine.
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In 2026, for variety's sake, it will be “dressed” in the green colors of the EU agenda, industrial policy, and military-industrial complex modernization, in various forms of inclusiveness, so that it will be pleasing to the eye, ear, and pocket of European officials. The key figure of the year to remember is the spending of $50–55 billion of foreign aid in 2026 — a prospect that excites both the imagination and the spirit of Ukrainian high-ranking officials.

They are ready for this, and the presence or absence of Mindich and Yermak will not affect it in any way. The distribution of $170 billion (the estimated amount of government spending in 2026) is what the Cabinet of Ministers and the Verkhovna Rada of Ukraine want most. It is rare for an official and his commercial partner to voluntarily give up such a generous feeding trough.

If no presidential or parliamentary election campaign is announced, if no scandalous "black swans" emerge from the latest NABU wiretap recordings, if no other documents or evidence surface in corruption cases and schemes involving Ukraine's top decision-makers, then 2026 will be a carbon copy of 2025.

Forecast. The hryvnia exchange rate will exceed ₴45 per $1. Inflation will eat away at more than 10% of Ukrainians' purchasing power, salaries, pensions, and the country's budget resources. Tariffs for housing, utilities, and transportation services will increase by 15–20%
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There is no significant force within the government that would speak out about the need to reduce non-military spending, so the budget deficit cannot be prevented. Trade and current account deficits will also remain at around 20% of GDP, as beneficiaries of government short-term bonds and military bonds will not allow the National Bank and the Cabinet of Ministers to let the hryvnia float freely.

Forecast. The budget deficit, trade deficit, and balance of payments deficit will remain at 20% of GDP.
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However, gold and foreign currency reserves exceed $50 billion and serve to support the hryvnia exchange rate in manual mode. Neither the National Bank nor any of the country's three governing bodies are talking about liberalizing the currency market.

In previous years, the “priests of Leviathan” expelled the spirit of liberalism from Ukraine's state administration through rituals of Marxist-Keynesian exorcism.

Forecast. The most acute line of conflict within Ukraine will be the confrontation between sole proprietors and the government over the right to preserve the current simplified taxation system without VAT and without additional regulatory requirements.
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For generous foreign aid, Ukrainian VIP officials are prepared to sacrifice the legal regimes that allow Ukrainians to stay afloat. It is advantageous for them to turn small businesses into a scapegoat, strike at it, and present the situation as part of a determined fight against corruption. Conveniently, enough additional loopholes in the legislation have already been created for those in power, such as techno parks, among others.

If the commander-in-chief of the economy, who is also the commander-in-chief and president of the country, clearly sides with the government and its program of "economic decline,” then last year's "cardboard revolution" may seem like child's play compared to what will happen in 2026, despite the course of military operations and the difficult situation on the front lines.

Numerous international conferences held by the Ukrainian government on reconstruction, as well as solemn reports on negotiations on the country's accession to the EU, will cause even more irritation.

It is unlikely that anyone will dare to change the nature of mobilization and the state of the labor market. Everything has calmed down here; prices and tariffs for the services of state bodies in these areas have been formed. This relative status quo can only be changed by the situation on the front line.

Forecast. Neither the Verkhovna Rada, nor the Cabinet of Ministers, nor the Presidential Administration will have advocates of liberal reforms in Ukraine in 2026.
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If elections are held in 2026, they could become either a “black swan” event for Ukraine, bringing a sharp increase in chaos and turmoil, or a phoenix that will revive hopes for the formation of a fundamentally new economic policy. Most likely, political turmoil will give rise to a vulture that will simply replace certain individuals in the government, leaving the structure of the economy, the size and functionality of the state, and the schemes for milking 97% of the population unchanged. Because in a country where the state is the main business, elections do not change the rules of the game — they only redistribute access to the feeding trough between the new and old guardians of Leviathan.

Topics

World

Monetary Policy

Governance and Regulations

Politics & Law

Trending

Economic crisis

GDP of Ukraine

Donald Trump

Inflation in Ukraine

Investing

rising unemployment

Yaroslav Romanchuk

A well-known Ukrainian and Belarusian economist, popularizer of the Austrian economic school in the post-Soviet space. He specializes in reforms in transitional economies in the post-socialist space.

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