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Guest Essay

By Mohamed A. El-Erian

Mr. El-Erian is a professor at the Wharton School of the University of Pennsylvania and the chief economic adviser at Allianz.

The global economy faced many hurdles in 2025. The U.S. government upended longstanding economic wisdom in a manner many economists feared would harm both the American economy and those of other countries. International institutions were sidelined, tariffs levied, the independence of the Federal Reserve questioned — all while debt continued to rise.

Add that to geopolitical crises throughout the world and the nonchalant manner with which capital markets financed artificial intelligence, and there were many opportunities for market failures and recession. Yet the American and global economies recorded strong growth, and stock markets soared.

It’s far from assured that we will be as lucky in 2026. To continue our run of economic and financial successes, there must be adjustments involving both the public and the private sectors. Both must make smarter choices, focusing on structural reforms, rather than simply throwing money at problems and imposing tariffs on trading partners.

Even though the Trump administration boycotted the Group of 20 summit, blanketed the globe in tariffs and dismantled the Washington consensus on liberalization and free markets that U.S. governments had repeatedly advocated to others, the American economy managed to accelerate real G.D.P. growth to 4.3 percent in the third quarter and avoid major trade retaliation from most........

© The New York Times