For the first time in its two-decade history, the World Economic Forum (WEF) has ranked ‘geoeconomic confrontation’, involving sanctions, tariffs, investment screening and weaponised supply chains, as the number one global risk facing major powers in 2026, indicating how economic policy is increasingly being used as an instrument of power politics.
In its Global Risks Report 2026, the WEF warned that “rules and institutions that have long underpinned stability are under siege in a new era in which trade, finance and technology are wielded as weapons of influence.”
The report’s top ranking reflects the growing sense that the world is no longer merely dealing with isolated economic disputes but with a new era of global confrontation where trade and technology restrictions have become strategic tools — and where escalating geopolitical tensions are now bleeding directly into markets, supply chains, and investment flows. The WEF’s annual risk rankings are closely watched not only by governments, but also by corporations and investors who use them to anticipate shocks. In 2026, the report said 18 per cent of respondents identified geoeconomic confrontation as the single biggest risk, pushing state-based armed conflict into second place at 14 pc.
Saadia Zahidi, managing director, WEF, said: “We are witnessing the turmoil caused by kinetic wars, the deployment of economic weapons for strategic advantage, and growing fragmentation across societies. Geoeconomic confrontation has emerged as the most severe risk over the next two years.”
The report warned that “global cooperation is indispensable but increasingly difficult to achieve” at a time when shocks are becoming more frequent and interconnected. In other words, global leaders fear that economic warfare may trigger crises even faster than military warfare, as sanctions, tariffs and export controls affect everything from energy supplies and shipping routes to semiconductors and critical minerals. The WEF’s findings land at a time when trade wars and tariff battles have re-emerged as core features of geopolitics, with major economies increasingly pursuing “security-first” economic strategies. “Heightened geoeconomic confrontation is both a cause and a consequence of the growing vacuum being left by the weakening of multilateral institutions,” the report said, warning that as the world shifts from unipolarity to multipolarity, a competitive order with fewer constraints on unilateral action is taking hold. This matters particularly for emerging economies, including India, which rely on stable global trade for exports, investment flows, energy imports and technology access. For India, the WEF flagged a mix of technological, social, and geopolitical vulnerabilities, even as it acknowledged that countries are modernising governance systems and digitising finance at scale. The report’s broader two-year outlook placed cyber insecurity among major global concerns, reflecting the “increasing frequency and sophistication of cyberattacks targeting critical infrastructure, businesses and government.”
In India’s context, this warning becomes especially relevant due to the country’s rapid digitisation in governance and payments, including the mass adoption of online platforms for banking and public service delivery.
Among the report’s most striking India-linked references is the warning that critical infrastructure, including water systems, could become a new arena of confrontation. It cautioned that governments with upstream control over rivers and reservoirs may divert water to their own populations at the expense of neighbours, particularly in periods of instability or escalating tensions. It flagged the Indus River Basin between India and Pakistan as one of the potential flashpoints in the next decade. After geoeconomic confrontation and armed conflict, the report ranked extreme weather events third, showing that climate shocks remain severe but are being overtaken in the short term by geopolitical and economic instability. Societal polarisation and misinformation/disinformation were both ranked high in 2026, reflecting how democracies across continents have been strained by distrust, identity politics and viral digital propaganda.
The report flagged that technological risks are also rising, including misinformation and disinformation and cyber insecurity. While environmental risks may appear to decline in the immediate outlook, WEF cautioned that the existential nature of climate threats still dominates the long-term horizon. The report pointed out 16 countries ranked geoeconomic confrontation among their top five risks in the Executive Opinion Survey (EOS) national risk survey, including several export-oriented economies, showing how deeply these tensions are shaping domestic perceptions. The consequences are not just economic. The report cautioned that “zero-sum power politics” can deepen instability within countries, as declining adherence to rule of law creates conditions for political and social unrest.