The Meridian 2026 Scorecard
If the world diverges, the failure will be visible. And owned.
Unlike multilateral outlooks, this scorecard does not assume smooth policy execution, institutional continuity, or political compliance. It is not a forecast. It is an audit framework, designed to be checked quarterly and graded annually.
How to Read This Scorecard
Each entry contains six elements: Baseline (where we start in December 2025), Claim (what we predict for 2026), Confidence with probability range, Key Risks, Early Warning Signals (quarterly milestones), and Audit Trigger (year-end pass/fail threshold).
Confidence bands with probabilities: High (75-85% probability) implies robustness across plausible shocks. Medium-High (60-75%) implies dependence on policy continuity. Medium (45-60%) implies sensitivity to policy execution or external shocks.
Probabilities are calibrated against historical pattern frequency, IMF forecast accuracy (approximately 1 percentage point optimism bias for emerging markets), and structural indicators from The Meridian Data Lab indices.
Audit triggers are deliberately unforgiving. They are designed to fail cleanly, not allow reinterpretation.
The Scorecard at a Glance
| # | Claim | Confidence | Year-End Trigger | Q2 Early Warning |
|---|---|---|---|---|
| 1 | Growth below expectations | Med-High (65%) | <3.5% ex-CN/IN 2 qtrs | <3.8% 1 quarter |
| 2 | Debt stress structural | High (80%) | >5 restructurings | >3 distressed |
| 3 | IMF completion falls | High (75%) | <60% complete | <70% on track |
| 4 | Capital fragments | Medium (55%) | Regional>Eurobonds | Regional≥75% |
| 5 | Climate fiscal events | High (80%) | ≥3 countries >1% GDP | ≥2 countries hit |
| 6 | Youth pressure rises | High (85%) | ≥8 countries worse | ≥5 countries worse |
| 7 | FX politically managed | Med-High (70%) | 5 with >20% premium | 3 with >15% premium |
| 8 | China incomplete | Medium (60%) | 2Q neg CPI+weak retail | 1Q deflation deepens |
| 9 | Security>Development | High (80%) | ≥10 countries | ≥7 countries |
The 2026 Scorecard: Nine Claims
1. The Global South Will Grow, But Below Political Expectations
IMF projects emerging and developing economies at 4.2 percent in 2025. Africa's working-age population growing at 15 million annually. South Asia adding millions more. Current formal job creation approximately 30-40 percent of working-age population growth across most economies. Youth unemployment 22 percent (Nigeria), 24 percent (Egypt), 18 percent (Pakistan), over 20 percent (China before data suspension).
Aggregate Global South growth will remain near 4 percent (IMF projects 4.1 percent in 2026), insufficient to absorb demographic pressure or stabilise public finances. This rate falls short of the 5-6 percent needed to create formal jobs matching working-age population growth in most African and South Asian economies.
Key Risks: Commodity price shock (oil sustained above $100 or below $60 would shift trajectories sharply). Major trade or security disruptions (Red Sea closures extending beyond Q1, South China Sea conflicts, Ukraine-Russia intensification, US-China tariff escalations beyond current levels).
- Q1 2026: Global South growth excluding China and India falls below 4.0 percent
- Q2 2026: Growth drops below 3.8 percent for one quarter
- Q3 2026: Two consecutive quarters below 3.8 percent signals audit trigger likely
Audit Trigger: Two consecutive quarters of sub-3.5 percent growth excluding China and India.
2. Debt Stress Will Become Structural, Not Cyclical
Pakistan services debt at roughly 50 percent of revenues. Kenya pays around 40 percent of revenues in interest. Egypt faces over $40 billion in annual external debt service against reserves around $35 billion. Ghana (defaulted 2022, $13 billion external debt) and Zambia (defaulted 2020, $13 billion external debt) in restructuring. Ethiopia negotiated framework November 2024 for $33 billion debt. Nigeria's Eurobonds trade 500-700 basis points above comparable emerging markets. At least 15 frontier and emerging economies face debt service exceeding 30 percent of revenues.
Sovereign debt stress will persist even as global rates ease, driven by refinancing walls, high foreign-currency debt shares, and weak revenue growth rather than temporary liquidity shortages. Spreads for frontier sovereigns remain elevated regardless of advanced-economy rate cuts.
Key Risks: Faster-than-expected global disinflation allowing aggressive rate cuts by major central banks (Fed funds below 3 percent by year-end). Large-scale coordinated debt write-downs through Paris Club or G20 Common Framework achieving comprehensive relief (historically rare: only 1980s Brady bonds and 1990s HIPC achieved scale).
- Q1 2026: Three or more countries miss Eurobond auctions or pay spreads exceeding 1000 basis points
- Q2 2026: Four countries simultaneously face IMF programme delays or request extensions
- Q3 2026: Five countries approach trigger threshold signals systemic stress
Audit Trigger: More than five emerging or frontier economies require second-round restructurings or repeated IMF programme extensions within 18 months.
Historical Precedent: Latin American debt crisis (1982-1989) saw 16 countries restructure, several multiple times over seven years. Structural adjustment without growth perpetuated stress. Only resolved when Brady bonds (1989) wrote down approximately 30-35 percent of debt. Asian financial crisis (1997-1998) showed even fast-growing economies (Thailand, Indonesia, South Korea) needed restructuring when dollar debt met currency crisis. Current situation parallels these patterns: foreign-currency debt, weak growth, high rates equal persistent stress regardless of policy adjustments.
3. IMF Programmes Will Multiply, Completion Will Not
Pakistan has had 23 IMF programmes since 1958, average completion rate approximately 40 percent without waivers or extensions. Argentina's programme history shows repeated cycles, rarely completing full terms. Egypt in continuous IMF engagement since 2016 with multiple extensions. Current active programmes: approximately 45 countries. Historical first-review completion rate without waivers: approximately 65 percent. Budget execution gaps of 15-30 percent common in weak-capacity states.
IMF engagement will expand to 50-plus countries, but programme completion rates will deteriorate below historical averages. Political cycles, social resistance (Kenya's June 2024 tax protests forced reversals), reform fatigue and capacity constraints undermine implementation even when governments initially commit.
Key Risks: Stronger political buy-in (new governments with clear electoral mandates and public support for reform, historically rare but occurred in Brazil 2016-2018). Front-loaded donor coordination (bilateral and multilateral financing coordinated to ease adjustment burden, reducing need for harsh immediate measures).
- Q1 2026: Completion rate for first reviews falls to 70 percent
- Q2 2026: Rate drops to 65 percent, approaching historical average
- Q3 2026: Below 60 percent signals audit trigger activation likely
Audit Trigger: Fewer than 60 percent of IMF programmes complete their first two reviews without waivers or deadline extensions.
Historical Precedent: 1980s structural adjustment programmes saw completion rates around 50 percent as political resistance mounted. 1997-1998 Asian crisis programmes had higher completion (70-80 percent) because crises were acute and alternatives limited. Current environment resembles 1980s more than 1990s: prolonged adjustment, political fatigue, competing financing sources (Gulf funds, China) providing alternatives that reduce IMF leverage.
4. Capital Will Fragment Along Regional Lines
Gulf sovereign wealth funds (Saudi PIF assets over $700 billion, UAE ADQ and Mubadala combined over $400 billion, Qatar QIA over $450 billion) actively financing African and Asian infrastructure. China's Belt and Road cumulative lending estimated $1 trillion, now focused on restructurings rather than new projects. Local currency bond markets in Brazil ($1.4 trillion outstanding), Mexico ($800 billion), India ($1.5 trillion) dwarf Eurobond issuance. Frontier sovereign Eurobond issuance 2024: approximately $15-20 billion. Regional development bank lending: approximately $40-50 billion annually.
Capital flows will increasingly bypass global markets in favour of regional financing ecosystems. Gulf funds, Chinese restructurings, and local currency markets will collectively exceed traditional Eurobond issuance for Global South sovereigns. This represents fundamental shift from 1990s-2010s Wall Street-centered capital allocation.
Key Risks: Renewed global risk appetite (if inflation falls faster than expected and major central banks cut aggressively, capital floods back to emerging markets as in 2009, 2017). Coordinated multilateral interventions (if IMF, World Bank and regional development banks jointly expand concessional lending through new facilities).
- Q1 2026: Regional financing reaches 60 percent of total sovereign financing
- Q2 2026: Regional sources exceed 75 percent, approaching parity with Eurobonds
- Q3 2026: Sustained above 90 percent signals trigger activation likely
Audit Trigger: Gulf, Chinese, and regional development financing exceeds Eurobond issuance for Global South sovereigns over a rolling 12-month period.
5. Climate Shocks Will Become Fiscal Events
Pakistan 2022 floods: over $30 billion damages (roughly 10 percent of GDP), 33 million displaced, required $1.1 billion IMF programme top-up. Horn of Africa droughts 2022-2023 forced emergency food imports exceeding $5 billion across region. IMF research documents severe climate events reduce GDP by 1-5 percent and increase fiscal deficits by 0.7-3 percent of GDP per event. Adaptation finance 2024: approximately $25-30 billion annually (far below $160-340 billion needed by 2030). Countries with debt service exceeding 30 percent of revenues: Pakistan, Kenya, Egypt, Ghana, Zambia, Ethiopia, Sri Lanka, others.
Weather-related shocks will directly destabilise budgets, not just output. At least three countries will experience climate-related fiscal slippage exceeding 1 percent of GDP, forcing emergency financing, programme revisions, or spending cuts elsewhere. Countries with high debt service are least able to absorb these costs, creating vicious cycle where climate vulnerability compounds fiscal vulnerability.
Key Risks: Rapid scaling of concessional adaptation finance (if the $160-340 billion annually needed by 2030 materialises faster than current $25-30 billion trajectory, unlikely but possible through new climate finance facilities). Improved disaster insurance mechanisms (parametric insurance, catastrophe bonds gaining meaningful scale in developing countries, currently under 5 percent penetration).
- Q1 2026: One country experiences climate event causing fiscal slippage over 0.5 percent of GDP
- Q2 2026: Two countries hit, with combined fiscal impact exceeding 2 percent of their respective GDPs
- Q3 2026: Three or more countries affected signals trigger activation
Audit Trigger: At least three countries experience climate-related fiscal slippage exceeding 1 percent of GDP within a single budget year.
Historical Precedent: Pakistan 2010 floods (damages 10 percent of GDP) required IMF programme modification. Thailand 2011 floods (damages $45 billion, 10 percent of GDP) disrupted global supply chains and hit fiscal balance. Philippines typhoon Haiyan 2013 (damages $15 billion, 5 percent of GDP) required emergency financing. Pattern shows climate events in fiscally constrained countries trigger debt spiral: disaster→emergency spending→higher deficit→higher debt service→less capacity for next disaster.
6. Youth Pressure Will Outrun Job Creation
Africa's working-age population grows 15 million annually through 2030. Formal sector employment growth: approximately 4-6 million jobs annually (40 percent of need). Graduate unemployment: 22 percent (Nigeria), 24 percent (Egypt), 18 percent (Pakistan), over 20 percent (China 2023 before suspension), 19 percent (South Africa). MENA youth unemployment historically 25-28 percent. Informality: 75 percent employment (Kenya), 68 percent (Indonesia), 82 percent (Bangladesh), 60-80 percent typical across frontier economies. Skills mismatch: university enrolment up 60-80 percent past decade in many countries, vocational training stagnant or declining.
Labour markets will fail to absorb new entrants, increasing informal employment and political risk. Youth unemployment or underemployment will rise in at least eight Global South economies despite positive GDP growth. This represents failure of "growth equals jobs" assumption that underpins most economic policy frameworks.
Key Risks: Unexpected manufacturing relocation (if "China+1" strategies accelerate dramatically beyond current pace, potentially creating 3-5 million formal jobs in Vietnam, Indonesia, India, Bangladesh). Large-scale public employment schemes (if governments launch major infrastructure or green transition programmes absorbing youth labour, as India's MGNREGA rural employment programme does at smaller scale).
- Q1 2026: Youth unemployment rises in three countries despite positive GDP growth
- Q2 2026: Five countries show deterioration in youth employment metrics
- Q3 2026: Seven countries affected signals trigger imminent
Audit Trigger: Youth unemployment or underemployment rises in at least eight Global South economies despite positive GDP growth.
7. Currency Stability Will Remain Politically Managed
Egypt has undergone repeated devaluations (2022, 2023, 2024), each delayed until reserves critically low, creating parallel market premiums reaching 30-50 percent before adjustment. Nigeria maintains multiple exchange rate windows generating parallel premium of 15-25 percent. Pakistan rupee experienced sharp adjustments in 2022-2023 after prolonged overvaluation. Current parallel-market premiums: Nigeria 20 percent, Egypt 15 percent (post-latest devaluation), Pakistan 10 percent, Argentina over 100 percent (outlier). Import-dependent economies (oil imports over 80 percent in South Asia, wheat imports over 80 percent in sub-Saharan Africa) face inflation rising 15-30 percent post-devaluation.
Exchange rates will be adjusted cautiously, often too late, amplifying inflation and unrest. At least five economies will maintain parallel-market premiums exceeding 20 percent for more than three consecutive months. Political fear of inflation leads governments to delay necessary adjustments until forced by reserve depletion or IMF conditionality, making adjustment more abrupt and socially destabilising.
Key Risks: Credible pre-emptive devaluations (if governments communicate clearly, implement targeted social protection, and adjust before reserves hit critical levels, historically rare but occurred in Chile 1990s, Poland 1990s). FX inflows from commodity windfalls (if oil, copper, agricultural exports surge unexpectedly, easing pressure temporarily as in 2021-2022 commodity boom).
- Q1 2026: Three economies show parallel premiums exceeding 15 percent
- Q2 2026: Four economies at 15-20 percent premium for two consecutive months
- Q3 2026: Five economies exceeding 20 percent signals trigger activation
Audit Trigger: Parallel-market premiums exceed 20 percent for more than three consecutive months in five economies.
8. China's Rebalancing Will Remain Incomplete
IMF projects China growth 5.0 percent (2025), 4.5 percent (2026). Headline inflation 0 percent (2025), persistent deflationary pressure. Current account surplus 3.3 percent of GDP. Household savings rate elevated (approximately 35 percent of disposable income versus 25 percent pre-pandemic) due to weak social protection. Youth unemployment exceeded 20 percent in 2023 before data suspension. LGFV debt estimated $9-13 trillion. Retail sales growth weak (3-5 percent nominal, often negative real). Property sector adjustment ongoing (sales down 25-30 percent from peak). IMF three-part reform framework estimates 2.5 percentage points GDP boost by 2030 if fully implemented.
China will sustain growth near IMF projections but fail to decisively shift toward consumption-led expansion. Evidence of incomplete rebalancing: two consecutive quarters of negative CPI alongside declining retail sales growth and rising household precautionary savings. Export reliance persists, current account surplus remains elevated, consumption share of GDP stagnates or declines.
Key Risks: Aggressive household income support (if Beijing implements large-scale direct transfers, consumption vouchers exceeding current modest programmes, or comprehensive social protection expansion addressing healthcare, education, retirement anxiety). Property-sector stabilisation (if housing market finds floor through successful LGFV restructuring, local government fiscal relief, and confidence restoration).
- Q1 2026: CPI negative for one quarter, retail sales growth below 4 percent nominal
- Q2 2026: Deflation persists, household savings rate rises above 36 percent
- Q3 2026: Two quarters negative CPI signals trigger activation likely
Audit Trigger: Two consecutive quarters of negative CPI alongside declining retail sales and rising household precautionary savings.
Historical Precedent: Japan's 1990s deflation and failed rebalancing despite numerous stimulus packages. Structural issues (corporate savings glut, weak household income growth, aging demographics) persisted despite policy efforts. Took two decades to partially address. China faces similar structural forces: high corporate and household savings, weak consumption, demographic aging, property sector deflation. Difference: China acts faster than Japan did, but faces more complex political economy (SOE vested interests, local government fiscal dependence on land sales).
9. Development Spending Will Lose to Security Budgets
Sahel conflicts (Mali, Burkina Faso, Niger) drive security spending increases 20-40 percent in West Africa. Horn of Africa instability (Somalia, Ethiopia, Sudan) elevates military budgets 15-25 percent. South China Sea tensions increase Asian defence spending 10-15 percent. Public wage bills consume 8-12 percent of GDP across Africa, crowding out capital spending. Debt service consumes 40-50 percent of revenues (Pakistan, Kenya), 30-40 percent (Egypt, Ghana, Zambia), limiting all discretionary spending. Education and health spending: typically 3-5 percent GDP each (below WHO recommendation of 5 percent for health). Defence and security spending: 2-4 percent GDP in most countries, higher in conflict zones.
Across much of the Global South, real increases in defence and internal security spending will outpace investment in education and health. At least ten emerging and frontier economies will show this pattern. Fiscal pressure forces zero-sum choices; politically sensitive security spending protected while development spending adjusts downward or grows more slowly.
Key Risks: Donor conditionality shifts (if major donors and multilaterals explicitly prioritise and co-finance education and health, creating fiscal space and political incentives for budget reallocation). Post-conflict demobilisation (if major conflicts resolve in Sahel, Horn of Africa, or elsewhere, allowing security budget reallocations, historically rare but occurred in Mozambique 1990s, Rwanda post-genocide).
- Q1 2026: Budget submissions show security increases outpacing social sectors in five countries
- Q2 2026: Mid-year reviews confirm trend in seven countries
- Q3 2026: Ten countries showing pattern signals trigger activation
Audit Trigger: Defence and security spending grows faster than combined education and health budgets in at least ten emerging and frontier economies.
What We're Watching Most Closely
Not all nine claims carry equal weight for systemic stability. Three stand out:
Claim 2 (Debt Stress Structural): If this fails, it means either coordinated debt relief happened (bullish surprise, unprecedented in scale) or restructuring contagion worse than predicted (bearish surprise, systemic crisis). Either outcome reshapes the entire Global South financing landscape. Success rate 80 percent, but the 20 percent downside matters enormously.
Claim 5 (Climate Fiscal Events): If this activates early (Q1-Q2 rather than Q3-Q4), it signals acceleration of climate-fiscal cascade beyond current models. Existing IMF and World Bank crisis frameworks assume episodic shocks; sustained quarterly climate-fiscal events would require new financing mechanisms urgently. This claim tests whether climate has shifted from humanitarian to macroeconomic crisis category.
Claim 8 (China Rebalancing): This claim can fail in two opposite directions, both with massive Global South spillovers. Success (China rebalances toward consumption) means commodity demand rises, import competition falls, current account surplus narrows: net positive for commodity exporters, manufacturing competitors. Failure (deflation worsens, savings rise, exports surge) means overcapacity floods global markets in EVs, solar panels, steel, chemicals: negative for almost everyone. Binary outcomes with huge external effects.
Alternative Scenarios: What Could Break Our Scorecard
This scorecard assumes no systemic shocks. Three scenarios could invalidate multiple claims simultaneously:
Upside Scenario (Global South Surprise): Major technology and manufacturing relocation creates 5 million-plus formal jobs across Vietnam, Indonesia, India, Bangladesh. Coordinated debt relief (G20 plus Paris Club plus private creditors) restructures $200 billion-plus. Climate finance scales to $150-200 billion annually through new facilities. China implements comprehensive household income support and social protection expansion. Result: six to seven of our nine claims fail in a positive direction. Probability: 10-15 percent.
Downside Scenario (Cascade Crisis): Oil shock (sustained above $120 or below $50 per barrel). Major sovereign default triggers contagion (if country larger than Ghana or Zambia defaults, creates spillovers). US-China trade war escalates dramatically beyond current tariff levels. Multiple simultaneous climate disasters (Pakistan-scale floods in three countries same year). Result: all nine claims activate, but faster and harder than predicted. Probability: 15-20 percent.
Wild Card (Black Swans): Major military conflict (Iran-Israel regional war, Taiwan Strait, India-Pakistan Kashmir escalation). Pandemic 2.0 requiring renewed lockdowns. Global financial system shock (three or more major bank failures, sovereign default cascade). Climate mega-disaster (single event over $100 billion damages). These events would require immediate scorecard revision with original preserved for audit. Probability: 10-15 percent combined.
Who Should Care Most About Which Claims
For Investors: Claims 2, 4, 7 (sovereign debt exposure, capital flow fragmentation, FX risk). Watch debt stress for portfolio allocation decisions, capital fragmentation for market access assumptions, FX management for currency hedging strategies. High-confidence claims (2, 7) should be priced into valuations; medium-confidence claim (4) represents asymmetric risk.
For Policymakers: Claims 1, 3, 6, 9 (growth delivery, IMF relations, youth employment, budget priorities). Watch growth expectations for political survival, programme completion for donor relations and financing access, job creation for social stability, security versus development trade-offs for long-term competitiveness. Claims 6 and 9 interact: youth unemployment plus security spending bias creates instability feedback loop.
For Corporates: Claims 1, 5, 7 (demand growth, climate disruption, currency volatility). Watch growth below expectations for sales forecasts and expansion plans, climate fiscal events for infrastructure reliability and supply chain continuity, FX politically managed for repatriation risk and local-currency revenue volatility. Claim 5 particularly important for agricultural, infrastructure, logistics sectors.
For Development Institutions: Claims 3, 5, 6, 9 (programme effectiveness, climate adaptation, job creation, spending priorities). All high-confidence claims represent areas where intervention most needed and where current approaches show limitations. Claim 3 (programme completion falling) suggests need for revised conditionality and implementation support models.
When We'll Revise This Scorecard Mid-Year
This scorecard assumes baseline conditions persist. We will issue revised assumptions if any of the following systemic shocks occur:
- Major military conflict with economic impact exceeding $50 billion (Iran-Israel regional war, Taiwan Strait military action, India-Pakistan Kashmir escalation)
- Global financial crisis (three or more major bank failures, sovereign default triggering contagion beyond immediate region, systemic credit freeze)
- Pandemic-scale health emergency requiring renewed mobility restrictions
- Climate mega-disaster (single event causing damages exceeding $100 billion, affecting multiple countries)
- Geopolitical rupture (US-China complete decoupling with trade falling below $300 billion annually, major trade bloc fragmentation)
Revision protocol: Original scorecard preserved and archived for accountability. "Revised Scorecard 2026" issued with explicit statement of which claims invalidated and why. Year-end audit grades both original and revised scorecards separately, explaining which assumptions held and which external shocks overrode framework.
How We'll Grade Ourselves in December 2026
Each claim receives one of five grades based on measurable outcomes:
✅ VALIDATED: Audit trigger activated as predicted. Claim proven correct.
→ NEAR MISS: Came within 10 percent of trigger threshold. Framework directionally correct but magnitude off.
⚠️ WRONG DIRECTION: Outcome moved opposite to prediction. Framework failed to capture dominant forces.
❌ INVALIDATED: Key risk materialized, rendering claim obsolete. External shock overrode structural forecast.
⏸️ INCONCLUSIVE: Insufficient data to assess definitively. Measurement challenges or data quality issues (rare, will be flagged if occurs).
Overall Scorecard Performance Bands: Seven to nine validated equals exceptional accuracy (framework robust). Five to six validated equals strong performance (most structural forces captured). Three to four validated equals mixed record (framework useful but incomplete). Zero to two validated equals framework needs major revision (missed dominant forces).
What We'll Publish December 2026: Individual claim grades with supporting evidence from IMF, World Bank, central banks, official statistics. Detailed explanation of why we got claims wrong if we did. Analysis of what we missed in our framework (structural forces, political economy constraints, external shocks). Revised assumptions and methodology improvements for 2027 scorecard based on lessons learned.
Why This Scorecard Exists
Most outlooks explain the world after it changes. This one is designed to be checked quarterly and graded annually.
At the end of 2026, every claim above will be revisited. Outcomes will be graded, not reinterpreted. Where assumptions failed, the reasons will be documented transparently. Where risks were underestimated, the framework will be revised explicitly. This is not a promise of accuracy. It is a commitment to audit.
The scorecard exists to impose discipline on analysis, on narrative, and on accountability. It distinguishes The Meridian from publications that revise quietly or contextualise failures without transparent accounting.
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