In his latest column in the Financial Times, renowned author and fund manager Ruchir Sharma has highlighted the 10 trends that will define the world economy. While the volatility in the geopolitical landscape is likely to define the global economy, Sharma pointed out that the AI bubble will be a key factor to watch in 2026. .
Here is a look at the top ten trends for 2026 penned down by Ruchir Sharma in his Financial Times column
1. How long will the AI bubble stay inflated?
Sharma wrote that the characteristics of the current AI landscape show signs of a market bubble. “Based on my framework for spotting bubbles, AI now ticks all the boxes to varying degrees: the AI-led US market is overvalued, overinvested, overleveraged and, perhaps most strikingly, over-owned.” he wrote.
Sharma highlighted that one major development that has often triggered a bubble burst in the past is the tightening of the monetary system by the central banks. Sharma elaborated that as long as there is enough liquidity in the market, the AI bubble stays inflated.
“The AI bubble can stay inflated until liquidity begins to dry up, but that risk is not limited to the Federal Reserve hiking short-term interest rates.” Sharma noted.
2. Comeback of International markets
Sharma wrote that the investor flow to the international markets in 2026 is likey as the global investors see risks in the US market. “ International markets trade at a steep one-third discount to the US, even as fundamentals are turning in their favour.”, he wrote. The international markets refer to markets other than US.
Sharma highlighted that while the US market attracted $1.7 trillion in investment in 2025, if confidence in the US falters, outflows will significantly weaken the dollar.
3. Quality stocks to resurge
Quality stocks in the industrial sector, financial services, and the consumer industry experienced a relative decline in developed countries and their worst-ever drop in developing markets. Sharma wrote that as the fear of the AI bubble mounts, the AI sector attracted the highest of investments, the investors are likely to return to the low-risk and high-return quality stock is expected to come back in quality stock.
“Now, however, nerves are on edge, as Google searches for “AI bubble” fly off the charts and people are starting to look for safer options. As a category, quality has outperformed global indices by about 2.5 per cent a year for the last 30 years, translating into a huge lead in cumulative returns over that period—about 2,600 per cent versus 1,200 per cent,” he wrote.
4. Global deregulation
Sharma writes that the global economies are to see a larger deregulation in 2026 as the countries open their economies for larger investments and innovations. The effects are likely to be seen in the United States, the European Union, Malaysia, Saudi Arabia and South America.
5. Chinese economy to stay under pressure
Sharma wrote that, as China’s total debt is already above 300 per cent of its GDP, it will struggle to raise money for economic stimulus. He wrote that China’s domestic economy is hardly growing, weighed down by a busted property market, excessive debt, and a shrinking population.
“Lacking the money for stimulus, Beijing will be hard pressed to spend more, and the domestic economy will keep disappointing.” Sharma wrote.
6. Chinese exports get targeted
Sharma wrote that Chinese exports could be a bigger target for global economies this year. Countries such as the United States, Germany, France, and Japan are likely to intensify their scrutiny and offer tougher competition to Chinese exports. At the same time, Chinese products could face an import tariff from countries such as Mexico, Thailand, and Japan.
7. South American markets and political connections
Sharma writes that for decades, South American stock markets have performed far better under leaders from the right wing. Last year, the region was home to the top-performing markets in the world, up more than 50 per cent on average, compared with 30 per cent in emerging markets as a whole and 16 per cent in the US.
Sharma added that the more the right-wing parties win, the more likely it is that Latin America’s markets will continue to rise.
8. US affordability crises
Sharma said that the affordability crisis in the United States is likely to get worse as grocery prices have increased by 30 per cent higher in the last five years.
“The US could easily be next in 2026, and it faces potentially greater consequences, since its hyperfinancialised economy relies so heavily on the goodwill of investors.”, Sharma wrote.
9. Immigration crackdown
Sharma wrote that the West is likely to get tougher on immigrants in 2026. Both the North American and European Union nations are likely to crack down on immigration amid AI and jobs crises.
“Amid widespread fear of AI and the threat it poses to jobs, a continuing immigration bust will push the opposite way. It is shrinking workforces and giving unions more bargaining power, which could add to labour costs—and inflation pressures—in 2026.” he wrote.
10. Alcohol stocks under pressure
Sharma points out that as alcohol consumption declines in the developed nations, alcoholic beverage companies’ stock could feel the pressure this year.
“This decade, global stocks are up nearly 60 per cent, while a basket of 16 leading international distillers, wineries and brewers is down 35 per cent, and the slide appears to be picking up speed.”, he wrote.
All in all, one of the cardinal points that Sharma makes in his predictions for 2026 is the resurgence of quality stocks. He also raised the red flag on AI and highlighted that there are signs of bubble and it might burst sometime in 2026.