As the world steps into 2026, uncertainty is the new normal.
According to the Economic Survey 2026, global growth and trade have so far held up better than expected -- but no one is entirely sure why.
Fragility, episodic shocks, and uncertainty are becoming structural features of the global system.
Also Read: Economic Survey 2026: A clever hack is rewriting India’s tax playbook
Geopolitical competition is intensifying, Europe’s security environment is increasingly complex, and financial vulnerabilities tied to leveraged tech investments are looming large.
Trade policy is now shaped more by political and security considerations than by efficiency or multilateral rules.
Taken together, these trends suggest a world that is less coordinated, more risk-averse, and prone to non-linear outcomes.
Against this backdrop, the Survey outlines three possible global scenarios for 2026 -- each with significant implications for India and the world.
Click here to catch the highlights of India's Economic Survey 2025-2026
Minor shocks could escalate into larger disruptions, triggering episodes of financial stress, trade frictions, and geopolitical tension.
While these events might not cause systemic collapse, they will require governments to act more actively to stabilise expectations.
In this scenario, countries operate in an integrated yet increasingly distrustful world.
The Survey suggests a 40-45% probability of this scenario playing out, citing the Global Economic Policy Uncertainty Index, which remains near its worst readings of 2020 (excluding the April 2025 spike following reciprocal tariffs).
Fear, it seems, lingers.
Strategic rivalry intensifies, the Russia–Ukraine conflict remains unresolved, and collective security arrangements weaken. Trade becomes coercive, sanctions proliferate, and supply chains realign under political pressure.
Financial stress spreads across borders with fewer buffers, and policy becomes more nationalised.
In this world, countries face sharper trade-offs between autonomy, growth, and stability. The probability of this scenario is also around 40-45%, making it nearly as likely as the “business as usual” case.
Financial stresses are already visible. As the Financial Times reported on Christmas 2025:
“Tech companies have moved more than $120bn of data centre spending off their balance sheets using special purpose vehicles funded by Wall Street investors, adding to concerns about the financial risks of their huge bet on artificial intelligence.”
Also Read: Economic Survey 2026: India’s trade buffers blunt the blow of Trump tariffs
IBM’s CEO has questioned the economics of LLM-based AI, reinforcing concerns that corrections in leveraged tech investments could ripple across financial markets.
Japanese Government Bond yields are also rising, signaling risk.
A key vulnerability lies in highly leveraged AI infrastructure investments. Many companies have built business models that assume optimistic execution timelines, rely on a small and concentrated customer base, and involve long-term capital commitments. If these assumptions fail, it could lead to major financial losses.
Such a correction would tighten financial conditions, making credit harder and more expensive to access. Investors and institutions would become more risk-averse, and the effects would spread beyond the AI sector, impacting broader capital markets.
If this financial stress were to occur at the same time as geopolitical tensions or trade disruptions, the combined effect could be catastrophic, potentially rivaling -- or even exceeding -- the severity of the 2008 global financial crisis.
The Survey notes a common risk across scenarios: disruption of capital flows and pressure on the rupee.
“India needs to generate sufficient investor interest and export earnings in foreign currency to cover its rising import bill, as, regardless of the success of indigenisation efforts, rising imports will invariably accompany rising incomes,” the Survey warns.
The policy response, the Survey suggests, should be one of strategic sobriety: maximising domestic growth while building buffers, redundancy, and liquidity. In short, India must run a marathon and sprint simultaneously.
2026 could be a year of managed disorder, multipolar tension, or systemic shocks -- but India is better equipped than most to withstand the turbulence. Its success will depend on the simultaneous pursuit of growth, resilience, and strategic governance -- a marathon run at sprint pace.
According to the Economic Survey 2026, global growth and trade have so far held up better than expected -- but no one is entirely sure why.
Fragility, episodic shocks, and uncertainty are becoming structural features of the global system.
Also Read: Economic Survey 2026: A clever hack is rewriting India’s tax playbook
Geopolitical competition is intensifying, Europe’s security environment is increasingly complex, and financial vulnerabilities tied to leveraged tech investments are looming large.
Trade policy is now shaped more by political and security considerations than by efficiency or multilateral rules.
Taken together, these trends suggest a world that is less coordinated, more risk-averse, and prone to non-linear outcomes.
Against this backdrop, the Survey outlines three possible global scenarios for 2026 -- each with significant implications for India and the world.
Scenario 1: Business as usual, but fragile
In the best-case scenario, 2026 largely mirrors 2025, but the margin of safety has thinned.Click here to catch the highlights of India's Economic Survey 2025-2026
Minor shocks could escalate into larger disruptions, triggering episodes of financial stress, trade frictions, and geopolitical tension.
While these events might not cause systemic collapse, they will require governments to act more actively to stabilise expectations.
In this scenario, countries operate in an integrated yet increasingly distrustful world.
The Survey suggests a 40-45% probability of this scenario playing out, citing the Global Economic Policy Uncertainty Index, which remains near its worst readings of 2020 (excluding the April 2025 spike following reciprocal tariffs).
Fear, it seems, lingers.
Scenario 2: Multipolar disorder
The second scenario paints a riskier picture. Disorderly global fragmentation.Strategic rivalry intensifies, the Russia–Ukraine conflict remains unresolved, and collective security arrangements weaken. Trade becomes coercive, sanctions proliferate, and supply chains realign under political pressure.
Financial stress spreads across borders with fewer buffers, and policy becomes more nationalised.
In this world, countries face sharper trade-offs between autonomy, growth, and stability. The probability of this scenario is also around 40-45%, making it nearly as likely as the “business as usual” case.
Financial stresses are already visible. As the Financial Times reported on Christmas 2025:
“Tech companies have moved more than $120bn of data centre spending off their balance sheets using special purpose vehicles funded by Wall Street investors, adding to concerns about the financial risks of their huge bet on artificial intelligence.”
Also Read: Economic Survey 2026: India’s trade buffers blunt the blow of Trump tariffs
IBM’s CEO has questioned the economics of LLM-based AI, reinforcing concerns that corrections in leveraged tech investments could ripple across financial markets.
Japanese Government Bond yields are also rising, signaling risk.
Scenario 3: Systemic shock cascade
The third scenario, though estimated to occur with only a 10–20% probability, is the most severe because it could trigger a systemic cascade. In this scenario, stresses in finance, technology, and geopolitics do not remain isolated -- they amplify each other, creating a much larger crisis.A key vulnerability lies in highly leveraged AI infrastructure investments. Many companies have built business models that assume optimistic execution timelines, rely on a small and concentrated customer base, and involve long-term capital commitments. If these assumptions fail, it could lead to major financial losses.
Such a correction would tighten financial conditions, making credit harder and more expensive to access. Investors and institutions would become more risk-averse, and the effects would spread beyond the AI sector, impacting broader capital markets.
If this financial stress were to occur at the same time as geopolitical tensions or trade disruptions, the combined effect could be catastrophic, potentially rivaling -- or even exceeding -- the severity of the 2008 global financial crisis.
India’s Position
India’s macroeconomic fundamentals provide relative resilience: a large domestic market, less financialised growth, strong foreign exchange reserves, and strategic autonomy. Yet, no country is fully insulated.The Survey notes a common risk across scenarios: disruption of capital flows and pressure on the rupee.
“India needs to generate sufficient investor interest and export earnings in foreign currency to cover its rising import bill, as, regardless of the success of indigenisation efforts, rising imports will invariably accompany rising incomes,” the Survey warns.
The policy response, the Survey suggests, should be one of strategic sobriety: maximising domestic growth while building buffers, redundancy, and liquidity. In short, India must run a marathon and sprint simultaneously.
2026 could be a year of managed disorder, multipolar tension, or systemic shocks -- but India is better equipped than most to withstand the turbulence. Its success will depend on the simultaneous pursuit of growth, resilience, and strategic governance -- a marathon run at sprint pace.
