Nomura Sees 2026 Global Growth Risks as Overstated, Expects Rupee Recovery
Nomura forecasts steady global growth around 3% in 2026, led by the US and India, with continued AI investment supporting productivity. The firm views India as a top 2026 pick due to structurally lower core inflation at 2.50%, monetary discipline, and reforms including GST and digitalisation. Despite recent weakness, Nomura expects the rupee to recover to around 90 against the dollar by year-end, as current depreciation doesn't reflect India's strong economic fundamentals.
*this image is generated using AI for illustrative purposes only.
Nomura expects global economic growth to remain steady in 2026, with the investment firm maintaining a constructive outlook despite early market volatility. Robert Subbaraman, Head of Global Macro Research at Nomura, said financial markets have stabilised after initial concerns related to geopolitics and central bank policies.
Global Growth Outlook
Nomura's base case projects global growth at around 3% or slightly higher for 2026, with specific regional drivers supporting this forecast:
| Region: | Key Driver |
|---|---|
| Developed Markets: | United States |
| Emerging Markets: | India |
| Technology Sector: | Artificial Intelligence Investment |
Subbaraman noted that geopolitical risks are expected to remain in the background without causing major market disruptions. The firm anticipates continued large-scale artificial intelligence investment and adoption, which should support productivity gains and corporate spending across multiple sectors.
US Federal Reserve and Market Environment
The research head expects the US Federal Reserve to implement further interest rate cuts, despite increasing political pressure on the central bank. "We think Fed independence will be compromised a little bit, but not substantially," Subbaraman said, emphasising the strength of US institutions.
For financial markets, the combination of strong growth, easing interest rates, and rising productivity could continue supporting equity performance, though current valuations are already elevated.
India as Preferred Economy
Nomura has identified India as one of its top picks for 2026, supported by several structural improvements:
| Economic Factor: | Status |
|---|---|
| Core Inflation: | Around 2.50% |
| Monetary Policy: | Disciplined approach |
| Fiscal Management: | Improved framework |
| Structural Reforms: | GST, digitalisation, FDI access |
Subbaraman explained that India's inflation is now structurally lower, with core inflation near 2.50% after excluding gold and silver. This improvement stems from monetary discipline, better fiscal management, and key reforms including the goods and services tax, digitalisation initiatives, and expanded foreign investment access.
Rupee Recovery Forecast
Despite recent weakness, Nomura expects the Indian rupee to recover modestly by year-end. The firm forecasts the dollar-rupee exchange rate at approximately 90 by December, representing appreciation from current levels.
| Currency Outlook: | Projection |
|---|---|
| Year-end Target: | ₹90 per USD |
| Expected Movement: | Modest recovery |
| Rationale: | Strong economic fundamentals |
Subbaraman emphasised that the recent rupee decline doesn't reflect India's underlying economic strength. "If we are now in a new regime of low inflation, there is no reason why the rupee has to continue to depreciate," he stated, highlighting the disconnect between currency performance and economic fundamentals.
The investment firm's positive outlook on India reflects confidence in the country's reform trajectory and macroeconomic stability, positioning it as a key beneficiary of global growth trends in 2026.
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