Geoeconomics and economic instability take centre stage in 2026
Global leaders face a volatile shift as economic warfare replaces armed conflict as world's primary threat, signalling a permanent move toward a fractured, multipolar future
- According to the World Economic Forum's Global Risks Report, "Geoeconomic Confrontation" has become the most urgent global risk for leaders, surpassing "interstate armed conflict" from the previous year.
- The risk of geoeconomic confrontation extends beyond tariffs to potential "full-scale economic warfare," including port blockades, export restrictions, and capital flow controls that directly impact global trade and supply chains.
- Economic risks have climbed alarmingly, with "Economic Downturn," "Inflation," and "Asset Bubble Burst" all jumping significantly in the rankings of global concerns.
- The combination of geoeconomic tensions like trade wars with economic vulnerabilities such as public debt and slowing economies threatens to create instability that extends beyond the business sector to society as a whole.
After a year of geopolitical turbulence and exponential technological shifts, the critical question global leaders and investors are asking is: "What will we face in 2026?"
The Global Risks Report 2026 by the World Economic Forum (WEF), which aggregates perspectives from over 1,300 global leaders and risk experts, illustrates a significant transition into the "Age of Competition."
While global risk dynamics are intensifying and broadening, the report emphasises that the future is not a fixed conclusion, but rather the result of decisions made by the global community today.
However, current signals point toward an increasingly "Multipolar" world, where confrontation is beginning to replace cooperation and trust.
Half of the respondents view the global situation over the next two years as "turbulent" or even "stormy."
Looking ahead ten years, concerns escalate further, with nearly one in five seeing a risk of "Global Catastrophic Risks."
Geoeconomics
The multilateral system that once served as a global pillar is faltering.
"Geoeconomic Confrontation" has become the most urgent agenda for leaders in 2026, overtaking "interstate armed conflict", last year's top risk, which has dropped to second place.
This risk is not merely about the tariffs we have become accustomed to; it has the potential to escalate into "full-scale economic warfare," involving port blockades, export restrictions on critical goods, cancellation of trade agreements, and capital flow controls.
All of these directly impact global trade, investment, and supply chains.
Global Economy
Economic risks have climbed the rankings most alarmingly compared to the previous year.
Beyond geopolitics, the risks of "Economic Downturn" and "Inflation" have jumped eight spots, while the risk of "Asset Bubble Burst" has surged by seven.
Accumulating public debt, slowing economies, and uncertain returns on investments in emerging technologies like AI or Quantum, when combined with trade wars, could result in impacts that extend beyond the business sector, potentially destabilising society as a whole.
The Double-Edged Sword of Technology
The exponential growth of AI and quantum computing offers immense opportunities but brings risks that cannot be ignored, from labour market disruptions and structural shifts in professions to threats against Information Integrity and military risks from autonomous weapons systems.
In the short-term (2 years), Misinformation and Disinformation remain ranked 2nd, with Cyber Insecurity following at 6th.
In the long-term (10 years), the adverse outcomes of AI are considered the fastest-climbing risk.
Fragile Societies and Polarisation
"Societal Polarisation" remains a chronic issue, consistently ranking in the Top 10 for both the short and long term over the past five years.
This issue is directly linked to inequality, declining well-being, and economic crises.
When exacerbated by misinformation and international conflict, societal fractures are likely to widen.
Environment Overlooked Crisis
Although environmental issues topped the risk charts for several years, they have been deprioritised in the short term this year as the world pivots toward addressing immediate livelihoods and conflicts.
However, within a 10-year framework, environmental issues still dominate the risk landscape.
Five of the top ten long-term risks are environmental, led by Extreme Weather, Biodiversity Loss, and Critical Change to Earth Systems.
The report clearly indicates that the world has reached a turning point.
Protectionist policies and increased government control over supply chains are painting a picture of a new world defined by "even more intense competition."
68% of respondents believe that in ten years, global politics will be fragmented into multiple poles.
Only 6% still hope that the traditional global order and international institutions will be restored.
Amidst this pervasive uncertainty, the only thing that can stabilise the situation is "Dialogue," which will be the heart of the World Economic Forum in Davos as leaders navigate the cracks of this fractured world.
