—Nironjan Roy—

At the beginning of each year, discussions and analyses usually focus on the economic direction for the new year. Renowned economists, professional groups, think tanks, financial experts, and popular news media express opinions, predictions, and forecasts about the economy in the coming year.

However, this has not been noticeably done this year. Although there has been little discussion about the overall economy, sectoral discussions and analyses have taken place, mostly on interest rates, inflation, employment, artificial intelligence (AI), and cryptocurrency.

While discussing these issues, the Federal Reserve (Fed) has, as usual, been positive in expressing its economic outlook for 2026.

As reported in the media, some Fed officials, while talking about economic projections for 2026, have said that they foresee a decent economic direction with business-friendly tax policies and less uncertainty over President Trump’s unpredictable tariff policies, which may fuel solid economic growth and a modest decline in the unemployment rate.

Inflation has declined to 2.7%, which is still above the Fed’s 2% target. Therefore, there is less likelihood of a rate cut at the Fed’s January meeting.

Last month, when the Fed announced its third consecutive rate cut, it indicated that further rate reductions would not happen soon. The tenure of the Fed’s current chairman is set to end in May, so President Trump will appoint Jerome Powell’s successor.

Since returning to the White House, President Trump has been pushing to cut policy rates to keep them as low as possible, a stance the current Fed chairman did not fully support. However, the benchmark rate has been cut successively three times, albeit with strong reservations.

The new Fed chairman may consider cutting the benchmark rate in alignment with Trump’s preferences, but decisions on rate changes are not exclusively in the hands of the chairman. The twelve-member policy rate committee decides rate changes by majority vote.

If Trump attempts to control that committee, the Fed’s independence will be questioned, which may hinder the investment climate in the US. Therefore, interest rates will remain the most important topic of discussion in this year’s economy.

Employment was the most discussed issue last year and will remain a prominent topic this year as well. As reported in the media, the Yale School of Management organised a gathering of CEOs in Midtown Manhattan, where two-thirds of the attending CEOs openly admitted that they plan either to lay off workers or maintain their existing workforce in 2026. Only one-third of the CEOs said they plan to hire.

The CEO of Kelly Services, one of the largest employment agencies in North America, cautioned that there would be a lot of “wait and see”. He further stated, “Some of the looming uncertainty will mean that we are going to continue to see investment in capital over people.”

Employment opportunities in banking, one of the largest job-creation sectors, have also been affected by the large-scale application of AI, resulting in significant layoffs. As reported in the media, the CEO of Wells Fargo, one of the world’s largest banks, said the bank expects to have fewer employees this year.

Notably, Wells Fargo’s workforce declined from 275,000 in 2019 to 210,000 in 2025. Wells Fargo is not alone; many large banks have persistently reduced their workforce over the last few years. Therefore, unemployment will remain one of the major problems in 2026, which may have an adverse impact on the economy.

AI investment has created massive hope and aspiration among investors and technology giants, but this optimism has recently suffered a setback following a drastic fall in Oracle’s share price. Last November, Oracle shares dropped sharply, with a single-day decline of about 10%, the largest fall in 2025.

On that trading day, Oracle was the worst-performing stock in the S&P 500 and dragged the Nasdaq Composite into negative territory.

Such a significant fall in Oracle’s share price has been viewed as alarming and particularly eye-opening for AI industry players. However, the reality is that multi-trillion-dollar investments are still anticipated in this sector in the coming years, making it one of the most important drivers of economic growth.

Cryptocurrency is another major area of economic discussion. President Trump himself is a crypto enthusiast, and his administration is a strong supporter of digital assets. Several crypto-friendly regulations have already been issued by the Trump administration, including allowing banking access for crypto companies and permitting some of them to set up banks.

Nevertheless, crypto prices have not risen as expected, while the stock market has experienced noticeable gains, frustrating crypto investors. To revive the crypto market, executives of crypto companies are considering moving operations outside the US, and the recent crypto conference held in Abu Dhabi reflects this shift. Therefore, crypto will remain one of the important economic factors this year.

The question now arises: how will these economic factors, mostly related to the US, impact other parts of the world, particularly our country’s economy? The US economy has become the epicentre of the global economy, so developments in the US will have direct or indirect effects worldwide.

For example, when the US Fed cuts benchmark rates, many other countries tend to follow. While our country’s economy may not be directly affected, indirect impacts cannot be avoided. Dollar liquidity, import-export activities, and foreign investment will largely depend on how the US economy influences the global economy.

Moreover, this is an election year for Bangladesh. Successfully holding elections, the assumption of power by the winning party, the consolidation of the new government’s position, and the development of economic plans will occupy much of the year.

As a result, the economy will continue to face challenges, and the business community must be prepared to withstand another year of uncertainty, challenges, and impediments.

——————————————————————————

The writer is a certified anti-money laundering specialist and banker based in Toronto, Canada. He can be reached at [email protected]