Invesco Releases 2026 Midyear Investment Outlook Focused on Resilient Economy

Hong Kong, June 22, 2026 – Invesco released its 2026 Midyear Investment Outlook, with expectations for the global economy to re-accelerate in the second half of the year.

The first half of 2026 was marked by a series of disruptive forces including geopolitical fractures and an upset of energy and commodity supplies. Despite these challenges, the economy remained resilient and corporate earnings have been strong, led by the technology sector and the artificial intelligence (AI) investment boom.

The Invesco Strategy & Insights team expects the global economy to re-accelerate in the second half of 2026, depending on the timing of any resumption in energy flows through the Strait of Hormuz.

“In the face of immense disruption and exogenous geopolitical changes, the global economy stayed on a growth course in the first half of the year,” said David Chao, Global Market Strategist, Asia Pacific at Invesco. “We see this in the economic data such as GDP expansion as well as consumer and investment spending, while consumers and corporates have also broadly reduced net leverage in recent years. Real wages have grown in most economies, and corporates continue to revise earnings growth forecasts higher and increase capital spending. While the global economic picture is dynamic, we maintain an optimistic growth outlook through the remainder of the year.”

Major Macro Asia Themes in Focus

The Outlook notes that global growth has held up better than feared, despite a renewed energy shock and elevated geopolitical risks. While headline inflation has lifted from higher energy prices, the energy shock has been relatively manageable since the global economy is less energy intensive than in the past. 

China appears particularly well-insulated from higher oil prices due to its electrification efforts and more diverse energy mix. The country is likely to benefit from the energy transition, as evident in the ongoing strength in “new economy” sectors, with export growth expected to remain robust especially of alternative energy technology and electric vehicles as the world seeks to build greater resilience to future energy shocks.   

In Japan, meaningful fiscal support is being deployed into defense spending, support for the technology sector and consumer tax cuts, enabled by a more stable political backdrop. Despite an expected rise in inflation, the Outlook expects Japanese monetary policy to stay accommodative.

“At the onset of the latest Middle East conflict in February, Asian economies appeared the most exposed to fuel price disruptions, yet the largest economies in the region have weathered such impacts relatively well,” said Chao. “The risk of a protracted disruption in global energy remains meaningful, however the falling overall oil-intensity of Asian economies provides some ceiling on the potential economic impact.” 

Key Investment Themes to Watch

The Strategy & Insights Team believes the themes that will matter most for investors in the second half of the year include market resilience, the US dollar, emerging markets, AI, and alternatives for income potential and diversification.

• Market resilience. Most major asset classes have delivered positive returns so far in 2026 despite periods of volatility. This is a reminder of the value of staying invested in the face of uncertainty. Resumption of traffic through the Strait of Hormuz will likely be met by a strong cyclical bounce led by emerging markets (EM) and European markets. US stock and bond markets will likely also perform well, but lag in cyclical areas such as materials and industrials.
• US dollar weakness. A core tenet of our 2026 Investment Outlook was that the US dollar would weaken this year. The Strategy & Insights team maintains that view and believes the dollar remains one of the more overvalued currencies on most measures. In this environment, the Outlook favors equities in non-US markets, especially EM.
• Artificial intelligence. The AI story remains a dominant theme for markets and many economies around the world. The impact and best way to get exposure to this theme, however, appears to be changing. The Outlook favors exposure to semiconductors and hardware players and takes a more cautious view on software companies
• Alternative sources of income and diversification. With inflation expected to remain above pre-pandemic norms in many developed economies, the Outlook highlights opportunities in real estate and private credit. Direct lending, bank loans, and AAA-rated collateralized loan obligations may offer diversification benefits in the current environment.

“We continue to expect the USD to weaken and for emerging markets assets to perform well, especially those EM markets that have benefited from the AI theme including South Korea and Taiwan,” added Chao.  “We should stay keenly aware of the risks, including an interruption to the AI capex cycle, a fiscal reckoning in developed markets and an unexpected acceleration in inflation. Nonetheless, the lessons from prior cycles of uncertainty underscore just how important it is to stay invested in a diverse portfolio of assets.”