Current news

• Investment in technology and artificial intelligence will drive growth and productivity in a cycle of private-sector indebtedness that is not excessive. According to the Institution, we are going through a new process of “creative destruction” that will transform the economy and generate new opportunities.
• Global GDP will grow by 3.3% in 2026, with one third of that growth explained by investment. Inflation will stabilise, although at higher levels in the US than in the euro area.
• The proximity of the US midterm elections will force Trump to focus on “sustaining” the cycle, and the US economy will accelerate. In Europe, Germany will stand out due to stronger fiscal stimulus, while Spain will grow above the average of its European peers (2.4%), although with some loss of momentum.
• Economic policies will remain accommodative thanks to fiscal stimulus in Germany, the US, China and Japan, as well as interest rate cuts that will be implemented by 80% of G-20 central banks. 
• The Federal Reserve will continue with gradual rate cuts (-50 basis points) and the European Central Bank will remain on hold close to 2%.
• In an extended cycle, Banca March remains constructive on equities and recommends reducing exposure to fixed income and increasing the weight of alternative assets as a diversification complement.
• In equities, the Institution’s experts are particularly positive about sectors with differentiated earnings growth, such as technology, infrastructure, defence and healthcare. They also expect broader participation by companies in market gains than in the past.

In this context, the Institution’s experts point out that technological transformation, particularly linked to the increasing adoption of artificial intelligence (AI), is generating a wave of investment that will not only boost productivity but also transform the economy and bring with it new energy needs and significant infrastructure investment. It is therefore estimated that close to one-fifth of US electricity demand by 2030 will be linked to data centres, reinforcing the strategic role of infrastructure-related investment.

A complex political environment, but with incentives to sustain the cycle

On the geopolitical front, Banca March notes that the US administration continues to reshape the global economic order with a transactional approach, but with the clear political objective of countering China. At present, the Asian giant’s trade influence in Africa is already three times greater than that of the US, while in South America its share of goods trade has risen markedly from 3% at the beginning of the century to the 22%, thereby exceeding the US share of 19%.

At the same time, although significant trade tensions persist, the Institution notes that the economic impact has remained contained. While the US has announced aggressive tariff increases (quadrupling previous levels), the effective revenue is almost 10 percentage points lower than announced and represents only around a quarter of the threats made on Liberation Day. In this context, the US economy has managed to reduce its direct dependence on imports from China from 13% to 9%, with part of this flow having been redirected to third countries. Meanwhile, at the global level, international trade has continued to grow and China closed last year with a record surplus.

Domestically, Banca March’s experts maintain that, as the US midterm elections in November approach, the Trump Administration will need to prioritise an economic policy more focused on restoring voters’ purchasing power, seeking at all costs to avoid an excessive deterioration of the cycle. In the event of a recession, the historical probability of losing at least one chamber in this type of election stands at 86%, and the probability of losing both stands at 70%. For this reason, they anticipate that this year the combined impact of tax reform and tariffs on GDP will be positive.

Acceleration in the US; Germany to stand out in Europe

Banca March expects the US to continue showing relatively greater strength, supported by technological innovation, stronger productivity growth and the creation of private wealth, which will sustain consumption and the stock market valuations of its companies.

The labour market is the weak link and will undergo a process of adjustment, with less dynamism in hiring but contained layoffs. Unlike what occurred in previous recessions, layoffs account for only 27% of the increase in unemployment seen in the US.

The Institution also notes that a more restrictive immigration policy will reduce long-term potential growth, but will also lower the number of new jobs required to keep the unemployment rate stable. This year, 35,000 new jobs per month would be sufficient, compared with the average of 175,000 needed in 2024.

In the eurozone, growth will be more moderate, although with a notable internal divergence. Germany is emerging as the economy with the greatest capacity to accelerate due to its fiscal stimulus, which will be directed mainly towards new investment in infrastructure and defence, favouring the recovery of its industrial base and, consequently, of its stock markets.

The disinflation and normalisation of official interest rates will continue

With slower employment growth, wage growth will also moderate, and with it the prices of services – the largest component of the CPI – will continue to ease. Over the course of the year, inflation is expected to remain slightly higher in the US (2.4%) than in the euro area (1.8%), but in both cases showing a stabilising trend at levels comfortable for monetary authorities.

In this context, Banca March emphasises that monetary policy “will accompany growth, not the other way around”. Accordingly, it anticipates that the Federal Reserve will continue its cycle of gradual rate cuts, lowering rates by a further 50 basis points to a range between 3% and 3.25%. Meanwhile, the European Central Bank (ECB) is expected to leave interest rates unchanged at 2%.

Constructive on equities and greater exposure to alternative assets

The necessary investment in AI development will gradually permeate broader segments of the economy, creating new investment opportunities – data centres, infrastructure and energy. In an extended cycle, the Institution remains constructive on equities, reduces exposure to fixed income, and highlights the increasing appeal of alternative assets given the greater difficulty in achieving positive real interest rates. This additional potential for equities is supported by healthy earnings growth and accommodative monetary policy. For 2026, we expect broader participation of sectors and companies in index gains, compared with the concentration of gains in a small number of companies that has characterised past periods.

The US continues to be the preferred region due to its structural advantages and technological leadership. Within the market, small caps stand out for their differentiated earnings growth and attractive valuations. In Europe, Germany emerges as the main relative opportunity. Among emerging markets, India stands out as a structural investment case, while exposure to China is focused primarily on technology as a diversifier.

By sector, the bank maintains its preference for technology, driven by artificial intelligence. This is also expected to be a transformative force, creating additional opportunities in infrastructure, particularly those related to electricity supply and other developments necessary for the deployment of this technology. These factors are likely to act as catalysts for growth in listed infrastructure, which currently offers attractive valuations and high resilience during periods of elevated market volatility.

Another sector among its favourites is Defence, which represents a global strategic necessity and is expected to continue receiving significant investment. Finally, the Healthcare sector is also highlighted for its predictable earnings growth, lower regulatory uncertainty, and, above all, its current trading at a historically discounted valuation.

Elsewhere, Banca March is taking a more cautious view of fixed income this year. Following the reduction in interest rates and the sharp compression of credit spreads, starting yields are now at less attractive levels than those seen at the beginning of last year. Given current inflation levels, this means that liquidity alone will not keep pace with inflation and the expected real return on fixed income is now less appealing.

The Institution is also cautious regarding duration, as the current term premium does not adequately compensate for the anticipated higher issuance of government debt to finance fiscal stimulus. As a result, there could be periods of pressure in the longer maturities. By segment, Banca March shows a clear preference for higher-quality credit over sovereign bonds, while also seeking carry through emerging-market debt.

In this less favourable environment for fixed income, Banca March emphasises the role of alternative assets, both liquid and illiquid, as a source of diversification and additional return within its portfolios.