Governments are adapting to a new geopolitical reality – Deloitte

 

Deloitte has said that, as anticipated in their last global economic outlook, elections around the world have driven notable policy changes that altered the trajectories of inflation, borrowing costs, currency values, and trade and capital flows in 2025.

According to the professional services firm, one significant development was that the United States raised significant barriers to trade, disrupting supply chains and creating financial market volatility.

Since then, it has struck trade deals with numerous countries, reinstating some predictability in those trading relationships, albeit at higher costs. Restrictive US trade policy has also pushed other countries closer together, with numerous trade deals being inked among non-US countries.

“In 2026, we expect to see the effects of these global policy shifts more clearly. Governments are adapting to a new geopolitical reality and adjusting their fiscal and structural policy plans accordingly.

“This will likely become more apparent in the new year. In addition, several countries are competing to remain at the frontier of technological innovation, particularly in artificial intelligence, while others are trying not to fall further behind.

“Significant investments to develop this innovation ecosystem are likely to continue in 2026. However, there is a risk that related spending has occurred too quickly and that a downward adjustment could be on the horizon.,” Deloitte said in its Global Economic Outlook 2026.