Global PulsePoint

Executive Summary 

18 May, 2026 - This update captures data through April and key developments available by 13 May 2026.

The global economy continues to grow but the operating environment has become more difficult. The IMF projects global growth of 3.1 percent in 2026 while the OECD forecasts 2.9 percent. Both point to the same underlying reality. Growth is holding but it is becoming narrower, more uneven and more exposed to disruption shocks than earlier in the year.

The clearest shift since the last update is the return of inflation pressure linked primarily to higher energy prices and supply-side risks associated with the Middle East conflict. This has interrupted the smoother disinflation path that central banks had expected entering 2026. The Federal Reserve, European Central Bank and Bank of England are now more cautious with financial markets increasingly questioning how quickly rates can fall if inflation and energy prices remain elevated.

Trade momentum is also slowing. The WTO expects merchandise trade growth to weaken materially in 2026 even as services trade remains comparatively stronger. The result is a more uneven global environment in which growth continues but operating conditions become harder. Financing costs remain elevated, supply chains are more exposed to disruption and capital is moving more selectively towards locations and sectors viewed as dependable.

This is not a classic downturn story. It is a higher-friction environment where execution matters more than expansion alone. Firms able to maintain delivery, absorb disruption and adapt quickly to changing conditions will be better positioned than those built solely around efficiency.

 Signals to watch into June

• Inflation relapse risk - Inflation pressures have firmed again driven primarily by energy markets. The key question is whether higher costs remain contained or spread more broadly into wages, services and expectations.
• Central banks losing room to ease - The Fed, ECB and BoE are all holding rates. Markets are increasingly reassessing how quickly easing cycles can resume if inflation remains above target.
• Bond markets testing credibility - Government borrowing costs have risen again particularly in the UK and US. Investors are placing greater emphasis on fiscal discipline and inflation credibility.
• Trade slowing beneath the headline economy - Goods trade is weakening more quickly than services trade. This favours digitally enabled and services-oriented sectors while exposing goods-heavy industries to softer demand.
• Investment concentrating in fewer places - FDI remains active but capital is increasingly concentrated in markets offering regulatory clarity, energy security and delivery certainty.
• Execution reliability becoming commercially valuable - The latest Global Compass highlights how operational continuity is becoming a source of competitive advantage. In a more disrupted world firms that continue delivering consistently gain trust, pricing power and investment confidence.

Market Dynamics / Where sentiment, risk & hiring are showing up

Financial Markets

The bottom line:

Equity markets remain supported by earnings growth and investment tied to data centre, semiconductor and digital infrastructure expansion but the foundation is narrow. US markets remain close to record highs, European equities have benefited from relative valuation support and Chinese equities continue to react strongly to policy developments. Market resilience should not be mistaken for broad confidence. Sentiment remains highly sensitive to inflation surprises, energy prices and interest-rate expectations.

Labour Market

The bottom line:

Labour markets are softening gradually rather than weakening sharply. US unemployment was 4.3 percent in April. Euro area unemployment stood at 6.2 percent in March. The UK unemployment rate was 4.9 percent in the January-to-March period while China’s surveyed urban unemployment averaged 5.3 percent in the first quarter of 2026. Hiring momentum is slowing but the more important challenge remains uneven access to specialised skills in sectors tied to infrastructure, digital systems and advanced manufacturing.

While headline unemployment rates remain relatively low by historical standards they are becoming less useful as standalone measures of labour strength. Participation, vacancies, hours worked and sector concentration provide a clearer picture of pressure points across economies. The issue for firms is not whether labour markets are broadly weak. It is whether the right capabilities remain available where growth and delivery depend on them.

Productivity

The bottom line:

Recent productivity data suggest improvement is emerging in parts of the global economy though gains remain uneven and concentrated in digitally intensive sectors. In the United States nonfarm labour productivity rose 2.9 percent year-on-year in the first quarter of 2026, even as quarterly momentum slowed from late-2025 levels. OECD analysis continues to show that productivity growth across many advanced economies remains structurally weak despite rising technology investment.

The more important shift is qualitative rather than broad-based. Firms investing successfully in digital infrastructure, automation and operational redesign are beginning to pull further ahead, while many businesses still struggle to convert higher capital spending into measurable efficiency gains. The dividing line increasingly lies not in access to technology alone, but in the ability to integrate it effectively into operations.

CEO Sentiment & Strategic Priorities

The bottom line:

CEO confidence remains cautious. PwC’s 2026 Global CEO Survey shows only 30 percent of CEOs are confident about revenue growth over the next 12 months down from 38 percent in 2025. Business leaders are placing greater emphasis on operational continuity, investment discipline, cyber resilience, supply reliability and selective market expansion rather than broad-based growth assumptions.

Spotlight Insight / Resilience

Licence to Deliver: why operational reliability is becoming commercial power

The latest Global Compass argues that disruption is no longer an occasional shock to navigate around. It is becoming a normal operating condition. Deliveries slip, cyber incidents interrupt systems, energy costs fluctuate rapidly, skilled labour remains unevenly available and regulatory conditions shift with little notice.

Headline macro forecasts can appear steadier than underlying operating conditions. A global growth forecast above 3 percent does not capture a delayed grid connection, a supplier failure, a cyber outage or a payments interruption. These are increasingly the frictions that determine whether growth forecasts translate into commercial performance.

Execution reliability is becoming commercially valuable. Customers favour firms that continue delivering under pressure. Investors reward businesses that avoid repeated operational disruption. Regulators and insurers increasingly focus on continuity and recovery capability. In this environment advantage depends less on having the most ambitious strategy and more on maintaining performance when systems come under strain.

Read the full Global Compass insight: Licence to Deliver: Competitive Advantage in a High-Disruption World.