The Economic Survey 2025–26 paints a cautious picture of the global economy heading into 2026, laying out three possible scenarios that reflect rising geopolitical tensions, fragile financial markets and growing uncertainty around technology-led investments. While global growth and trade have so far “held up better than expected”, the Survey warns that this resilience may mask deeper vulnerabilities that could surface with a lag.

“Fragility, uncertainty and episodic shocks are increasingly structural features of the system,” the Survey says, adding that the balance of risks has “shifted perceptibly over the past year”. Geopolitical competition, trade policy driven by security concerns rather than efficiency, and financial risks linked to leveraged technology investments are reshaping the global landscape.

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Base case: Managed disorder, not stability

The most likely outcome for 2026, according to the Survey, is a continuation of current conditions, but with thinner margins of safety. Described as “business as in 2025”, this scenario comes with rising volatility and persistent stress points. Financial markets, trade flows and geopolitics remain functional, but increasingly fragile.

“In this setting, with the margin of safety being thinner, minor shocks can escalate into larger reverberations,” the report says. While this does not lead to a systemic collapse, it does require more frequent government intervention to stabilise markets and expectations.

The Survey characterises this world as “managed disorder”, where economies remain integrated but trust continues to erode. It assigns a probability of about 40–45% to this scenario. Reflecting this fragility, the Global Economic Policy Uncertainty Index is close to its worst levels since 2020, excluding the spike seen in April 2025 following the introduction of reciprocal tariffs.

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Financial markets, too, are already pricing in these risks. Gold prices, for instance, rose sharply from $2,607 to $4,315 per ounce in 2025, signalling investor concerns around geopolitical tensions, negative real interest rates and financial tail risks.

As of writing this report, the price of gold per ounce was over $5500.

Escalation and systemic shock risks

The second scenario, which the Survey assigns a similar 40–45% probability, envisages a more disorderly global outcome. Under this path, strategic rivalries intensify, the Russia–Ukraine conflict remains unresolved in a destabilising form, and collective security arrangements weaken further.

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“Trade becomes increasingly explicitly coercive, sanctions and countermeasures proliferate, supply chains are realigned under political pressure,” the Survey says. Financial stress events, it adds, could spread across borders with “fewer buffers and weaker institutional shock absorbers”. Policy responses in this world become more nationalised, forcing countries to make sharper trade-offs between growth, stability and economic autonomy.

The third and most severe scenario, though assigned a lower probability of 10–20%, carries outsized risks. This involves a systemic shock cascade where financial, technological and geopolitical stresses amplify each other. The Survey flags concerns around highly leveraged AI infrastructure investments, noting that some business models depend on “optimistic execution timelines, narrow customer concentration, and long-duration capital commitments”.

A correction in this space, the Survey warns, could tighten financial conditions and spill over into broader markets, especially if it coincides with geopolitical escalation or trade disruptions. “The macroeconomic consequences could be worse than those of the 2008 global financial crisis,” it cautions.