Three Major Risks Threatening Global Economy in 2026

Despite forecasts that the global economy will grow by around 3.1% in 2026, this headline figure masks a growing fragility beneath the surface. Inflation remains uneven, cooling in some regions while accelerating in others, while governments today have far less fiscal and monetary flexibility to absorb shocks than they did in previous years. 

At the same time, global trade and supply chains are being reshaped under mounting political, geopolitical, and energy pressures.

Based on surveys and forecasts from more than 2,000 economic experts, the Global Outlook 2026 report identifies three major economic risks that could significantly undermine global growth in the coming year.

Fragmentation of the Global Economic System

For decades, companies structured global supply chains primarily to minimize costs. That model is now being dismantled.

Rising geopolitical risks, trade tariffs, sanctions, and the revival of industrial policy have pushed governments and corporations to prioritize political security over economic efficiency. One clear manifestation of this shift is “friend-shoring”, the relocation of manufacturing and supply chains to politically allied countries rather than the lowest-cost producers.

This represents a fundamental change in the rules of global trade. Instead of maximizing efficiency, businesses are increasingly optimizing for geopolitical safety.

Trade agreements are also moving away from traditional multilateral frameworks. Countries are favoring bilateral and regional deals over global institutions. Trade interventions have surged, with tariffs imposed by G20 countries reaching their highest levels since the World Trade Organization began tracking them.

According to the World Economic Forum, tariffs and geo-economic confrontation rank among the top global risks in 2026. Even established agreements such as the US-Mexico-Canada Agreement (USMCA) are facing strain. At the same time, new arrangements are emerging, including the EU-Mercosur free trade agreement and a fresh trade deal between Canada and China focused on electric vehicles.

Global trade is unlikely to collapse, but it is entering a prolonged phase of adjustment to a new political reality.

Escalating Geopolitical Tensions Among Major Powers

Geopolitical conflict remains one of the most serious threats to the global economy. Russia’s invasion of Ukraine in 2022 provided a stark example, triggering energy price shocks, food supply disruptions, accelerated trade fragmentation, and hundreds of billions of dollars in additional military spending. The conflict continues into its fifth year with no clear resolution.

Looking ahead to 2026, experts warn of multiple potential flashpoints: rising tensions in the Taiwan Strait and the risk of a China-U.S. crisis; the possibility of renewed conflict between Iran and Israel in the Middle East; Russian provocations against NATO members, including cyberattacks and infrastructure sabotage; growing risks linked to North Korea following advanced missile tests; and potential escalation of U.S. military actions against criminal groups in Venezuela.

Even without direct warfare, geopolitical uncertainty alone is enough to slow investment, disrupt trade, and weaken global economic growth.

Energy Market Volatility and a Faltering Energy Transition

A widening gap between electricity demand and supply is emerging as a structural constraint on global growth. Demand is surging due to artificial intelligence, data centers, and electric vehicles, while aging power grids and regulatory delays limit the speed of expansion.

In the United States alone, electricity demand is projected to increase by 662 terawatt-hours by 2030, equivalent to adding the combined power output of Texas and California. Yet infrastructure development moves slowly: electricity transmission projects can take more than five years, gas turbines require three to four years for delivery, and nuclear power plants often take over a decade to complete.

This mismatch between rapidly rising demand and sluggish supply risks pushing electricity prices higher, increasing costs for businesses, delaying investments, constraining AI expansion due to power shortages, and creating bottlenecks in both digital and energy transitions.

Even major corporations are feeling the strain. Microsoft, for example, has reportedly moved to restart an old nuclear reactor to secure affordable electricity.