What’s in store for the world next year? As our correspondents looked ahead, the thread stitching it all together – or pulling it apart – led back to the White House.
North America
Predicting the activities of Donald Trump is a fool’s errand. Under the 47th US president, expect the unexpected.
On one hand, it’s difficult to see how 2026 could be more disruptive than the year gone by. Trump upended the global trading order by increasing US tariffs to levels not seen since the 1930s, albeit with lots of characteristic flip-flopping and backsliding (he would call it “being flexible”).
He slammed the southern border shut, purged government departments, ripped up diversity and inclusion practices, pulled out of climate accords and global bodies, forced a reckoning over defence spending, bombed Iran, blew up suspected drug boats in international waters, brought Russian leader Vladimir Putin in from the cold, and led Europe and Ukraine on a rollercoaster ride the endpoint of which remains unknown.
Trump 2.0 set a cracking pace from day one. His transition team knew what it wanted to do and how to do it – after all, this was Trump’s second go at changing the country. Much of what came out of the Oval Office resurrected policies from his first term.
Next year will be slower. Trump’s goals are pretty obvious: reduce the US’s trade deficit and keep investment flowing into the country, control inflation and keep prices down for American consumers, hold the House of Representatives at November’s midterm elections (or minimise Republican losses), and – of course – end the Russia-Ukraine war and earn himself the Nobel Peace Prize.
The world’s largest economy enters 2026 with moderate expectations after a mixed year. Economic growth has slowed and unemployment is slightly higher. Trump’s immigration crackdown reduced the supply of labour, but the job market has slowed even more. Inflation is basically where it was a year ago – it did not skyrocket due to Trump’s tariffs, as some predicted, though it has risen over the past few months.
Stockmarkets are going gangbusters, driven by frenzied investment in artificial intelligence (amid warnings of an AI bubble). But that makes for a two-speed economy, with low-income households battling high prices and insecure work, as Philadelphia Federal Reserve president Anna Paulson noted in a recent outlook.
“While headline growth is shaping up to be pretty decent this year, the base of support looks different – with a lot of concentration at the top,” she wrote.
Trump made a rod for his own back when he campaigned aggressively on affordability, giving struggling voters the impression he could bring down prices for everyday goods. That is proving to be easier said than done. Gas prices are down; the rest not so much, no matter what Trump claims.
Spooked by a bad showing for Republicans at off-year elections in November, the president and his team are clearly feeling the heat. They have shifted focus to domestic economic matters, with Trump and Vice President JD Vance both holding rallies in Pennsylvania in December that are part of a broader affordability roadshow planned for 2026.
Trump has vigorously pushed redistricting plans in multiple states that would advantage Republicans in next year’s midterms – blatant gerrymandering, which is something both sides of US politics have long done. It may help deliver extra seats in pockets of the country, but Trump knows that if voters are angry on election day, it won’t be enough.
On that, the president has a few aces up his sleeve. In 2026, the US will celebrate the 250th anniversary of the Declaration of Independence – the country’s birthday – in what promises to be a blockbuster year of patriotism, pomp and self-congratulation. In the middle of that, the US (with Mexico and Canada) will also host the FIFA World Cup, with a match to be played on Independence Day in Philadelphia.
Trump is working hard to attach himself to sport and general “good vibes”. He has attended football, soccer, tennis and UFC matches, and if you were to summarise his hyperbolic messaging over the past year, it would be his oft-repeated line that America is “the hottest country in the world right now”. In 2026, that might actually be true.
At the same time, the country is no closer to surmounting the intractable problems that have plagued it for so long. Another federal government shutdown is just weeks away – the end of January – unless Democrats and Republicans can overcome their impasse on healthcare. There is no sign of reform on gun violence, despite a rising tide of political violence that struck both sides of the divide in 2025, and made a martyr of conservative activist Charlie Kirk.
Finally, if we accept that Trump’s star will fade in 2026 as the midterms approach, and he gets closer to lame-duck status, then it follows that other stars will rise. Trump is already being asked about anointing a successor for 2028; given his power in the MAGA universe and the Republican Party, his endorsement would be a massive boon. Vance is front and centre, sure, but so is Marco Rubio and, inevitably, Trump’s son, Don Jr. How these men position themselves in 2026 – what they emphasise, where they separate themselves from Trump, whether they declare their hand – are things to watch this year.
– Michael Koziol, North America correspondent
Europe
Europe drifted through 2025 as if its citizens had plenty of time to agree on their direction so they could, one day, dig their oars into the water and get moving. They enter 2026 with their prosperity and security in doubt – and their oars still in the air too much of the time.
European leaders speak with resolve about the challenges facing the continent: slow growth, higher prices, the war in Ukraine, hybrid warfare from Russia, strains in the American alliance and discontent over migration and social change. Leaders jet across Europe to talk about these problems. But their people want faster action.
The year ahead will test Europe’s capacity to tackle challenges that are already known to its leaders and people. So far, at least, there is no consensus over what to do. First, there are divisions between countries on the way forward – such as the splits in the European Union over the war in Ukraine and the rules on migration. Second, there are divisions within countries over domestic policy – such as the political brawl in France over cuts to welfare spending.
Trump confronts Europe on two broad fronts: his claim that it is being destroyed by migration and his argument for a peace deal on Ukraine that is softer on Putin than most European leaders would like. Many of the questions for Europe in 2026 come down to whether it starts to see the world as Trump does – or breaks with his vision and sets its own course.
Putin is seen as the greater threat. While Trump antagonised Europe by raising tariffs, the Russian president endangered Europe with hybrid warfare. Poland believes Russia sent spies to damage its rail networks, while Denmark believes it sent drones to disrupt its airports and Britain convicted petty criminals who committed arson on orders from Moscow.
Every major leader in Europe calculates that appeasing Putin will only encourage him, while Trump assumes he can make a deal on Ukraine that makes money for American business. Only the Europeans seem guided by the lessons of 1938. These two approaches will be hard to reconcile in 2026. If Trump insists on his path, Europe will have to embark on its own.
This means the year ahead could bring a severe rupture in the transatlantic alliance. The scale of it, like so much that depends on Trump and his movement, will be shaped by the verdict of US voters in the midterm elections in November. Will Americans cement or reject the MAGA philosophy? In 2026, the most important election for Europe will be the American one.
Domestic pressures will continue to divide Europe when its leaders seem incapable of uniting their countries behind strong budget and economic policies. Australia has a gross debt of 55 per cent of GDP. That percentage is 180 in Greece, 148 in Italy, 116 in France, 98 in Britain and 64 in Germany. Europe is trying to rearm against Moscow at the same time it increases its welfare payments, after years of failure to balance tax and spending. (All figures are from the OECD).
British Prime Minister Keir Starmer retreated on cuts to welfare in 2025 because Labour backbenchers rebelled. French President Emmanuel Macron lost one prime minister, and almost another, because the National Assembly opposed spending cuts and tougher pension rules. German Chancellor Friedrich Merz took power in May and has seen a collapse in his popular support.
Parliaments are split on economic and budget policy because they reflect voters who want generous spending and low taxes, as if the European welfare state can last forever with no regard to the debt.
The test for Starmer comes in May when voters in Wales and Scotland decide their parliaments. Starmer is on the nose, even if he is not on the ballot paper. A big defeat for Labour in Wales, in particular, probably triggers a leadership spill to replace him. The British media acts as if the spill will come sooner than that.
Wales is also a test for Nigel Farage, the populist leader of Reform UK. The opinion polls tell him that voters want his hard line on migration, but he has no real economic agenda to deliver better times for families. He has convinced the media he is a contender – and some act as if he is certain to become prime minister. Only in May will we know if he has convinced the voters.
Anger about migration will be a defining dispute in 2026, and not only because Trump says Europe is being destroyed by migrants.
In Britain, protesters gather outside asylum seeker hotels. In France and Germany, voters shift to hard-right parties. Many voters do not want more migrants, and they were turning to the right before Trump arrived.
One guide to voter sentiment will come in April, when Hungarian Prime Minister Viktor Orban seeks to hold power in parliamentary elections. His key policy: no migrants. He complains about support for Ukraine, is friendly to Putin and favoured by Trump.
Another key election will come when Danish Prime Minister Mette Frederiksen faces the people. She moved ahead of other leaders to clamp down on migration, departing from the old template for social democrats, and she wants to follow Australia in restricting social media for children. The election is due by October 31.
There are bright points ahead. The Winter Olympics will be held in Milan in February, and the Eurovision Song Contest will be held in Vienna in May. Both will try to highlight harmony.
Alas, Europeans have no reason to think their world will improve in 2026. Even the best possible outcome for Ukraine, peace with lasting security, does not end the problems across the region. In the year ahead, Europe will be a sphere of low growth and high discord.
– David Crowe, Europe correspondent
North Asia
North Asia enters the new year with a hangover from Trump’s trade war with China and the uncertainty of the fragile truce brokered in the final months of 2025.
In April, the world’s attention will focus on Beijing, where Chinese leader Xi Jinping will host Trump for his first state visit to China during his second term.
This meeting will set the tone between the two superpowers in 2026, giving an early indication of whether the truce will hold and if it can be shaped into a long-term trade deal or even a broader bargain extending into areas of foreign policy.
Xi enters the negotiations from the position of strength, having flexed China’s dominance over rare earth supply chains to extract concessions from Trump in the form of relaxed technology export controls, while conceding little substantive ground. Xi will look to capitalise on this leverage as China seeks to roll back bans on its access to superior US chips and semiconductors – the main impediment to it surpassing America as the world’s leading tech power.
While Xi did not raise the issue of Taiwan during his meeting with Trump on the sidelines of the APEC summit in October, many analysts expect him to do so in Beijing. This would build on their phone call in November, where Xi told Trump that Taiwan’s return to China was an “integral part of the post-war international order”.
Officials in Taipei will be watching closely for any signs of Xi’s growing impatience towards annexing the island and any shifts by Trump in US policy that could see him trade Taiwan’s security for a grander bargain, such as Xi’s support for ending the war in Ukraine. China hawks in the Trump administration insist this will never happen.
On the home front, Xi faces a gargantuan challenge in turning around China’s sluggish domestic economy, which is weighed down by trillions of dollars in debt and the long drag of a property market collapse.
In March, Beijing will publish its 15th five-year plan, laying out its policy blueprint to 2030. This is supposed to pivot China’s economy from an export-driven machine to one powered by its own consumers, but so far, Chinese policymakers have given no clear pathway for how they will convince reluctant consumers to spend.
Meanwhile, China’s record trade surplus with the world, which topped $1 trillion for the first time in 2025, shows that Trump’s tariffs failed to dent Beijing’s export juggernaut. But this will only increase concerns across Asia, Europe and the US that their markets will continue to be flooded with an oversupply of cheap Chinese goods.
Japan and South Korea are still reeling from their encounters with Trump’s America First transactionalism, which forced them to commit to a combined $US900 billion ($1.4 trillion) in investments in US industries in exchange for lower tariffs and ongoing US security protection. But with both countries’ economies in the doldrums, the deals have been a bitter pill for domestic audiences and a tough sales challenge for South Korean President Lee Jae Myung and new Japanese leader Sanae Takaichi.
Takaichi, who became Japan’s first female prime minister in October, has had a baptism of fire. She enters 2026 having endured weeks of Chinese fury over her comments canvassing scenarios in which Japan could enter a war over Taiwan. China’s outrage has extended beyond demands for a retraction to a campaign of economic and military coercion, including curbing tourism to Japan, banning seafood imports and increasing military patrols near Japan’s territory.
It comes as Takaichi tries to pump stimulus in Japan’s heavily indebted economy to ease inflation pressures on households, while working to convince a wary public of the need to reform the country’s pacifist constitution and ramp up defence spending.
To this end, China’s aggression is not only helping burnish her case, it has boosted her political stocks as a leader refusing to relent to a bully. She sails into the new year with the highest approval ratings for a Japanese leader in years.
In South Korea, the Lee administration will be approaching its first full year in power after a failed martial law bid landed the former president in jail on rebellion charges and threw the country into months of chaos in 2025. Lee has repositioned the country’s foreign policy posture towards China as more moderate than his hawkish predecessor, while trying to open engagement channels with North Korea.
However, Lee’s rapprochement efforts – including dismantling loudspeakers at the North Korean border and banning propaganda leaflet drops – have so far been roundly rejected by Pyongyang, which views the South as its principal enemy.
In 2026, the world awaits the ultimate wild card: a potential meeting between North Korean dictator Kim Jong-un and Trump. Trump is eager for it, Kim is open to it.
Any meeting would plumb the same terrain as previous talks between the two men in Trump’s first term – that is, North Korea’s nuclear program. Those talks fizzled out.
However, this time around, Kim would enter any talks with increased leverage and a demand that the US accept it as a legitimate nuclear power.
No longer a total pariah, North Korea has strengthened its alliance with Russia by aiding Putin’s war in Ukraine. In 2025, Kim joined Putin and Xi on the global stage at a military parade in Beijing, giving the North Korean regime a stamp of legitimacy from the anti-US bloc.
Any meeting would test Trump’s appetite for abandoning the US’ long-held position that North Korea must denuclearise, with talks instead pivoting to arms control discussions.
Don’t rule it out. Trump’s national security strategy, released in December, conspicuously did not reference North Korea or denuclearisation of the Korean Peninsula at all. North Korea was mentioned more than a dozen times in a similar strategic document during Trump’s first term.
– Lisa Visentin, North Asia correspondent
South-East Asia
Like the rest of the world, South-East Asia will be sweating on Trump’s endeavours to build his MAGA utopia at the expense of everyone else.
Still, no region seems as squeezed, on so many fronts, by the power competition between China and the US as this one. Trump’s America has stepped away from South-East Asia, leaving a vacuum for Beijing to move in as the new, stable partner on security, trade and matters of soft diplomacy, such as aid.
The Lowy Institute’s Asia Power Index shows the US maintaining the No.1 power ranking in Asia, but it has lost significant ground to China. Drill further into the findings and China has shot from fifth to first on the measure of “efficacy of political leaders in advancing their country’s diplomatic interests in Asia”.
Unless Trump changes tack, which appears unlikely, China will make more headway in 2026. South-East Asian nations do not want to be in a position where they have to “choose” between China and the US, but events may be leading that way.
Vietnam will be an interesting case study in navigating these great-power waves. It exports huge amounts of goods to America, which has imposed a tariff rate of 20 per cent. This is roughly on par with other South-East Asian nations.
But the issue for Vietnam next year will be how the Trump administration chooses to tackle, define and punish the trans-shipment of heavily tariffed Chinese goods. Chinese exports to Vietnam have surged this year, some of which are bound for the US.
One country firmly in America’s corner is the Philippines, which will continue its at-times violent spat with China in the South China Sea (or West Philippine Sea, as the Filipinos call it).
China claims almost the entire sea for itself, leading to tensions not only with the Philippines but with Malaysia, Indonesia, Vietnam and Brunei.
The bad feelings have escalated under the presidency of Ferdinand Marcos Jr, who has pivoted the Philippines towards the US, its old treaty ally, after the China-friendly years of Rodrigo Duterte.
Duterte has been in custody in The Hague since March for crimes against humanity related to the Philippines’ brutal “war on drugs” during his presidency. His case will inch forward in 2026.
Domestically, Marcos Jr will be pressured to lock up the elites responsible for siphoning off money earmarked for flood-management initiatives. The sprawling, multibillion-dollar scandal has triggered mass protests and fed into rumblings of a coup.
Indonesia will begin the new year with significant and highly controversial changes to both its criminal code and criminal procedure code. Civil liberty groups are horrified at what some of the provisions may mean for democracy and personal freedoms.
How President Prabowo Subianto manages his massively expensive social programs – such as free school lunches – while ensuring key agencies and local governments have enough funds to effectively do their jobs, including flood mitigation, will also be an issue to watch. Something might have to give. Could 2026 be the year Indonesia abandons its new capital city project?
On trade, the world’s third-largest democracy could be on a collision course with the US after the latter accused the Prabowo administration of backtracking on agreed points. Punitive measures such as even higher tariffs could ensue.
Thailand, whose politics are coloured by meddling from the royalist-military establishment, will go to the polls in early February. The progressive People’s Party, the opposition, will probably win. But it won last time, too, when it was called the Move Forward Party. Move Forward was blocked from forming government and then dissolved by the Constitutional Court.
Anutin Charnvirakul has been prime minister for a few months, following the court-ordered sacking of Paetongtarn Shinawatra. The People’s Party helped elevate Anutin on the condition that he would call fresh elections. So, here we are.
The incumbent has been sharply criticised for his handling of last month’s major floods. Now, though, Thailand is again fighting with Cambodia, allowing Anutin to tap into a deep well of nationalist sentiment and play the patriotic, wartime leader.
With neither side willing to appear weak or to cede territory, hostilities, whether overt fighting or at a diplomatic level, will play out through 2026.
The other upcoming election, if we can call it that, is in Myanmar, which has been mired in a brutal civil war since the military coup in February 2021.
Seeking legitimacy, the junta has called multiphase elections starting on December 28. Analysts and other nations, including Australia, view the vote as a means for the military to entrench power.
– Zach Hope, South-East Asia correspondent
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