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Economics and Business›Scenarios4 days ago

Will the Dollar Lose Its Dominance? Three Scenarios for the US Currency's Future Through End-2026

What is the trajectory of the US dollar in 2026 and will it maintain its position as a global reserve currency?

🗓 Through 2026 (with projections to 2030)
🟢Best Case: Dollar as Safe Haven
25%
  • •Continued Middle East geopolitical tensions drive investors to safe havens
  • •Superior US economic growth supports demand for American assets
  • •Persistent US yield advantage over other currencies maintained through relatively higher interest rates
  • •Fed success in achieving soft landing without sharp recession

Dollar Index (DXY) remains in 100-105 range maintaining strength with only modest decline, while US share of global reserves holds at 58-60%, confirming continued dominance.

🔵Most Likely: Temporary Weakness Followed by Recovery
55%
  • •Short-term economic weakness in first half of 2026 prompts Fed to cut rates 1-2 times
  • •Dollar Index declines from 100 to 94-96 by Q2
  • •Inflation surge in second half from tariffs and government spending halts rate cuts
  • •Dollar recovers toward 100 by year-end amid slowing European and global growth

Dollar experiences V-shaped movement: weakens in first half but recovers strongly in second. Reserve share declines to 55-57% but dollar remains dominant currency. DXY ends year at 96-102.

🔴Worst Case: Structural Decline in Status
20%
  • •Escalating geopolitical crisis leads to global recession and collapse in US asset demand
  • •Policy failure amid conflicting Fed and executive decisions destabilizes economy
  • •Acceleration of de-dollarization as central banks diversify toward gold and alternatives
  • •Collapse of confidence in US fiscal credibility due to massive deficits and high debt

Dollar Index collapses below 90, with reserve share falling to 50% or less. Digital currencies and alternatives gain traction rapidly. US loses position as anchor of global financial system in medium term.

The US dollar faces a 2026 filled with challenges and opportunities, with multiple factors vying to shape its future: Federal Reserve monetary policy, escalating geopolitical tensions especially in the Middle East, and structural developments in the global monetary system. Markets anticipate potential weakness in the first half of the year followed by recovery in the second half, but actual path depends on a complex balance of economic and political factors.

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Economics and Business›Interview23 hours ago
Mohammad El-Erian: Economic Diversification for Arabs is Not Optional But Strategic Necessity

The world-renowned economist Mohammad El-Erian discusses his perspective on the challenges of economic diversification in the Arab region and lessons learned from Gulf states' experiences. Dr. El-Erian examines the importance of structural transformation and its impact on economic and social stability across the Arab world.

D

Dr. Mohammad El-Erian

International Economic Expert and President of Queens' College, University of Cambridge

2025
As global economic challenges accelerate and inflation rates rise, Arab nations seek new strategies for diversification and stability.
س

Dr. El-Erian, you've held advisory positions at several major international institutions. How do you assess the current economic situation in the Arab region compared to previous years?

The Arab economic situation is undergoing critical transformations, especially following intensified global pressures and geopolitical volatility. What's concerning is that several Arab countries remain heavily dependent on singular natural resources. However, there are tangible positive signs: Gulf states are achieving qualitative breakthroughs in diversification programs, and the private sector is playing an increasingly dynamic role. The challenge is that steps haven't been quick or bold enough in some cases.

س

You observe the experiences of countries like the UAE and Saudi Arabia in diversifying their economies. What did these countries succeed at and where are the gaps?

The UAE and Saudi Arabia have demonstrated genuine political will for diversification, particularly through their vision programs. Success lies in attracting foreign investment and developing new sectors like tourism, technology, and renewable energy. However, gaps persist: reliance on top-level government decisions undermines flexibility, the labor market needs more elasticity, and education still hasn't adequately matched market needs. Most importantly, long-term sustainability requires a shift in economic culture, not just ambitious projects.

س

Inflation and financial stagnation threaten stability. How can Arab countries withstand these challenges?

This question leads us to a harsh reality: there are no quick or easy solutions. Arab countries need well-thought-out monetary policies that balance inflation control and avoid recession. Governments must gradually reduce their support for goods and services responsibly, while ensuring social protection for vulnerable groups. Investment in digital and knowledge infrastructure is the best fortress against global economic volatility.

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Economics and Business›Articleyesterday
Meta to Spend $65 Billion on Artificial Intelligence
Meta to Spend $65 Billion on Artificial Intelligence
Meta revealed plans to spend up to $65 billion in 2026 to build massive AI infrastructure, painting a daunting picture of new industrial competition. Meta is not alone — Amazon, Alphabet, and Microsoft are following the same path without hesitation. These four companies combined plan to invest over $650 billion in 2026, a sum exceeding the GDP of 150 nations. The question is not whether to invest in AI. The real question is: can you afford not to?