CHENNAI: The world is entering a far more confrontational economic era, with rising rivalry between major powers now seen as the single biggest threat to global stability, according to the latest Global Risks Report released by the World Economic Forum. The report, which draws on the views of hundreds of global policymakers, business leaders and experts, signals a decisive shift in the nature of global risk from traditional financial or environmental shocks to a more politically charged and fragmented economic landscape.
Geoeconomic confrontation, a term that captures the growing use of trade, investment, technology controls, sanctions and industrial policy as tools of strategic competition, has moved to the top of the global risk rankings for 2026. This reflects a deepening trend in which economic relations are no longer governed primarily by efficiency and market logic, but by national security, geopolitical alliances and strategic rivalry. Governments are increasingly willing to restrict exports, block investments and reshape supply chains to protect domestic industries or weaken competitors, even at the cost of higher prices and slower global growth.
The report suggests that this shift is being driven by heightened tensions among major economies, a weakening of multilateral institutions and a loss of trust in the global rules-based trading system. As cooperation gives way to competition, businesses face greater uncertainty over access to markets, technologies and capital, while countries worry about overdependence on foreign suppliers for critical goods such as semiconductors, energy, food and advanced machinery. The result is a more fragmented global economy, in which efficiency is often sacrificed for resilience and political alignment.
This new phase of economic rivalry is also closely linked to geopolitical and security risks. Conflicts between states, regional wars and diplomatic breakdowns are increasingly spilling over into trade and investment policies, turning economic tools into extensions of foreign policy. At the same time, the rapid rise of artificial intelligence and other strategic technologies is intensifying competition, as countries race to control innovation, data and computing power, adding another layer of tension to already strained international relations.
The World Economic Forum’s assessment shows that the risks facing the global economy are no longer isolated or purely financial. Economic confrontation is interacting with other major threats such as extreme weather, social polarisation and misinformation, creating a volatile environment in which shocks can quickly cascade across borders. For example, trade disruptions or sanctions can fuel inflation, strain government finances and worsen social unrest, making economies more vulnerable to political instability.
Looking beyond the immediate horizon, the report also paints a picture of a world moving towards a more fragmented and multipolar order. Power is becoming more dispersed, alliances more fluid and global cooperation harder to sustain. This raises concerns that coordinated responses to long-term challenges, especially climate change, public health and financial stability, could become more difficult to achieve at precisely the time they are most needed.
For businesses and investors, the message is that geopolitical and geoeconomic risks can no longer be treated as peripheral issues. Decisions about where to invest, where to source and how to structure supply chains will increasingly be shaped by political considerations as much as by cost and efficiency. Companies may need to build greater redundancy into their operations and prepare for sudden policy shifts that can disrupt markets overnight.
The World Economic Forum’s warning comes at a time when the global economy is already struggling with slowing growth, high debt levels and lingering inflationary pressures. In such an environment, a surge in economic confrontation could amplify volatility and undermine confidence, making it harder for countries to achieve stable and inclusive growth.
As world leaders gather for discussions on the future of the global economy, the report underscores the urgency of finding ways to manage rivalry without allowing it to spiral into destructive economic warfare. While competition between nations is unlikely to disappear, the challenge will be to prevent it from eroding the foundations of global prosperity and pushing the world into a prolonged period of instability and fragmentation.