2026 Outlook

For 2026, the World Bank projects that the global economic growth will ease slightly to 2.6 percent (from approximately 2.7 percent in 2025), as the temporary boost from an early spike in global trade and strong AI-related investment fades. Overall, the global economy is projected to remain resilient.22 Inflation is also forecast to continue easing in 2026, falling from an estimated 4.1 percent in 2025 to around 3.8 percent in 2026, according to the IMF.23

Emerging markets and developing economies (excluding China) are forecast to maintain steady growth of 3.7 percent, though regional divergences remain pronounced across FMO’s markets. Growth is set to remain subdued in Europe and Central Asia (2.4 percent in 2026), where trade tensions, slower euro area demand, and ongoing uncertainty continue to weigh on activity.

Sub-Saharan Africa is projected to strengthen to 4.3 percent growth in 2026, while Latin America & the Caribbean is expected to see a modest pickup to 2.3 percent as external conditions and domestic demand gradually improve. South Asia is set to remain one of the fastest growing regions globally at 6.2 percent, driven by resilient domestic activity and services exports. Growth in low-income countries is projected to remain robust at 5.6 percent, supported by lower interest rates, higher real incomes, improved consumer confidence, and increased trade and industrial activity.24

As we look ahead, the world around us continues to shift at a rapid pace, sometimes even on a daily basis. The joint United States and Israeli strikes on Iran, followed by retaliatory actions targeting Gulf States and other countries, have further destabilized an already volatile region, with consequences extending far beyond the Middle East. These rising geopolitical tensions, the economic uncertainty that accompanies them, and, on a different technological front, the accelerating impact of AI, are reshaping the environment in which FMO operates.

Heightened geopolitical risks influence our outlook for 2026. The war in the Middle East came on top of an already uncertain global economic environment. A prolonged conflict has the potential to disrupt the entire Gulf region for years to come, with repercussions on global energy markets, price stability and food security.25 Net energy importers and countries with weaker social safety nets and limited fiscal space, such as the many of countries in Sub‑Saharan Africa and South Asia, are exposed to downside risks. The global trading system that was already under stress due to the volatile US tariff regime could be substantially impacted.26 Much depends on the duration and geographic spread of this conflict. We will continue to monitor geopolitical developments closely and reflect on how different scenarios might affect the markets we serve.

Additionally, with global temperatures reaching new highs, the coming year may bring more severe climate-related disasters. The likelihood of major events, such as crop failures, water shortages, and storm damage, is expected to increase due to a stronger El Niño weather pattern and ongoing warming trends heading into 2026.27

Priorities in 2026

Against a backdrop of economic and geopolitical uncertainty, FMO’s role as a development finance institution is more vital than ever. In 2026, we will build on our strong performance in 2025 and stay on course toward our Strategy 2030 goals by focusing on (i) growing our impactful business, (ii) further strengthening our capabilities and (iii) ensuring our foundation is solid. In particular, we aim to grow our impactful business portfolio and ensure sufficient (future) regular results by growing income at least in line with, or faster than, costs.

Growing impactful business

We remain firmly committed to our 2030 ambitions: €10 billion in Green investments and €10 billion in RI investments. In 2026, we will prioritize strengthening FMO’s balance sheet and laying the foundation for future income and impact by further embedding productivity-enhancing initiatives and improving how we serve our customers.

Growing our impactful business is not only about increasing volume but also about quality, for example, by increasing investments in least developed countries (LDCs). In 2026, we will place greater focus on these markets, supported by an annual LDC investment target and continued implementation of our LDC Action Plan. We will also strengthen our longstanding entrepreneurial spirit by further enhancing our capacity for innovation, creating space for transformational ideas, and reassessing our products and capabilities.

Improving our capabilities

To support the growth of our impactful business, we will continue strengthening FMO’s organizational capabilities, particularly in efficiency, and people and needed skillsets. Improving productivity is a necessity to achieving our 2030 ambitions and maintaining financial health. We will enhance our ability to work smarter and more efficiently, including through increased use of AI. In 2026, our Digitalization Program will further advance the digitalization of the investment origination processes, with the aim of reducing handling times.

Culture is a key enabler of our strategic goals, and we rely on our people to achieve these goals. We will continue embedding a culture aligned with our values, with a strong focus on the behaviors that shape our day-to-day ways of working.

Ensuring FMO's foundation is solid

Ensuring a solid foundation remains a key priority, as it underpins our license to operate. In 2026, we will focus on increasing income while keeping growth in staff-related and other expenses under control to safeguard our long-term financial health. We will also closely monitor the effectiveness of our interventions to keep the Total Capital Ratio outlook above the alert level in the years leading up to 2030. In addition, we will maintain strong regulatory compliance by adapting to evolving requirements and further strengthening our risk processes.