Global Markets to Watch This Year and Why They Matter

Not stock picks, economic relevance and trends

By Laura Fitzgerald

When people talk about "global markets," they usually mean the U.S. stock market. But in 2026, several other markets matter just as much not necessarily for their investment returns, but because they're reshaping trade, controlling critical resources, or driving structural changes that affect the entire world economy.

India: The New Manufacturing Alternative

India is expected to remain the world's fastest-growing major economy in 2026, maintaining growth around 6.7 percent. But what makes India economically significant isn't just its growth rate it's its positioning in global supply chains.

As companies diversify beyond China, India has emerged as a key destination through its Production-Linked Incentive schemes, which are pulling in manufacturing and electronics investments. The country is pursuing what economists call "multi-system positioning" , maintaining relationships with both Western allies and China, preserving strategic flexibility that smaller economies lack.

India also represents a massive domestic consumption story. With a young, increasingly educated population and ongoing financial sector reforms opening to global investors, it's becoming a growth engine independent of export demand. For the global economy, India's success or failure in converting demographic potential into actual job creation will shape whether developing economies can compete in the AI era.

Japan: The Quiet Comeback

After decades of stagnation, Japan is showing signs of renewed momentum. The economy is projected to grow moderately at around 0.8 percent to 1.3 percent in 2026, but what matters more is what's happening underneath those numbers.

Japan is finally escaping deflation. Consumer prices have maintained above 2 percent for three and a half years, and the Bank of Japan is raising interest rates reaching 0.5 percent with more hikes expected. Corporate reforms are unlocking excess cash on balance sheets, fueling capital investment, wage growth, and shareholder returns.

Japan's role in global supply chains tied to automation, semiconductors, and advanced manufacturing makes it economically critical. Nearly half of emerging market indices ex-China consist of Japan-aligned economies like South Korea and Taiwan, which are central to AI chip production and advanced manufacturing cycles.

Southeast Asia: The Supply Chain Winners

Vietnam, Indonesia, Thailand, and their neighbors are benefiting enormously from supply chain diversification. Southeast Asia's internet economy has tripled to $100 billion over four years and is projected to triple again to $300 billion by 2025, with Indonesia and Vietnam growing over 40 percent annually.

These economies are absorbing manufacturing and infrastructure investment as companies pursue an "India+ASEAN" composite approach rather than relying solely on China. 

Countries like Vietnam practice successful multi-system positioning integrating into U.S. and Japan-centered manufacturing while maintaining diversified infrastructure relationships.

Their economic significance extends beyond their GDP. They're testing whether emerging economies can capture AI-related productivity gains without displacing workers, and whether flexible, export-oriented manufacturing bases can thrive amid rising trade tensions.

Latin America: Resource Control and Political Shifts

Brazil, Mexico, and their neighbors matter because they control natural resources critical for AI infrastructure and the energy transition. Latin America is expected to benefit from higher prices on key exports of metals, minerals, and agricultural products, driven by global AI data center construction and renewable energy demand.

Mexico's proximity to the U.S. makes it central to nearshoring trends, though it faces structural dependence on North American supply chains that limits flexibility. Brazil faces a transformative presidential election in October 2026 that could signal a turning point after years of political mismanagement.

Many Latin American countries have average effective tariff rates below universal tariff thresholds due to exemptions like the USMCA for Mexico. This positions them to increase exports to the U.S. while Asian countries face elevated tariffs.

China: Still the Biggest Question Mark

China faces ongoing structural headwinds including weak private sector confidence and a struggling property sector. Growth is expected to decline from 4.8 percent in 2025 to 4.3 percent in 2026. Yet China remains economically critical because of its deflationary impulse affecting global prices and its control over rare earth mining and processing essential for technology supply chains.

China's "innovate first, regulate later" approach gives it advantages in self-driving cars, AI, robotics, and biotech. The country doubled down on export-led development, which keeps bringing deflationary pressure globally helping central banks but hurting competing manufacturers.

Why These Markets Matter

These aren't just investment opportunities, they're the economies determining whether global supply chains remain resilient, whether critical resources flow smoothly, whether emerging market demographics become assets or liabilities, and whether AI benefits spread globally or concentrate in a few countries.

In 2026, geopolitical realignment is emerging as the dominant macro driver, reshaping trade, capital flows, and regional economic performance across developed and emerging markets. Understanding these markets means understanding the future structure of the global economy.