The World Economic Forum’s Global Risks Report 2026 identifies geoeconomic confrontation as the greatest global risk. Economic risks are increasing most sharply in the short term, with both the threat of recession and the risk of inflation rising eight places compared to the previous year. Fears about the disruptive effects of artificial intelligence are also growing, while environmental risks are becoming less urgent in the short term, though they do not disappear entirely.
Munich Re warns in its Economic Outlook 2026 that, overall, downside risks outweigh potential scenarios of better-than-expected performance. Geopolitical risks and abrupt US policy decisions with consequences for the economy and international trade could negatively impact global economic development. Furthermore, sharp rises in stock markets have heightened concerns that a potential overvaluation of technology stocks in the wake of the AI ​​boom could lead to financial market crashes.
Allianz Trade identifies four specific downside risks: further tariff escalation, a de-dollarization shock in US monetary policy with a probability of 35 percent, a sovereign debt crisis with a probability of 20 percent that could restrict fiscal policy in France, Italy, the UK and the US, and a further increase in geopolitical tensions, particularly in the event of a conflict between NATO and Russia, an escalation in the Middle East and an open conflict between China and Taiwan.
The new war and its economic consequences
The US-Israeli attacks on Iran, which began on February 28, 2026, have opened up an entirely new dimension of geopolitical uncertainty. Iran’s retaliatory attacks on the Gulf states are striking at the nerve centers of global oil trade and international finance. For metropolises like Doha, Dubai, and Manama, even limited attacks on hotels, airports, and industrial areas are a catastrophe that threatens their reputation, built up over decades, as safe business and tourism hubs. The price of oil is already reacting with significant fluctuations, and financial markets are under pressure.
This conflict strikes the global economy at a moment of vulnerability. The US economy was just beginning to recover from the fallout of its own trade war. Europe is grappling with stagnation and military spending. China is struggling with a housing crisis and overcapacity. The escalation in the Middle East adds another variable to an already fragile equation, the full extent of which is not yet clear.
The paradoxical role of artificial intelligence
Paradoxically, the AI ​​boom is proving to be a stabilizing factor. The IMF explicitly attributes its upward revision of its global growth forecast to investments in new technologies such as artificial intelligence. The global economy has shaken off the trade and tariff disruptions of 2025, thanks in part to the technology boom. But risks lurk here as well. At an ACCA event, renowned economist Kenneth Rogoff warned that the enormous uncertainty is not reflected in the financial markets. He predicted a major stock market crash sometime in the next three years, but conceded that the market could still rise significantly before the crash.
Has the lowest point been reached?
The question of whether the low point of global economic development has been reached cannot be answered with a simple yes or no. The data paints a nuanced picture. On the positive side are the resilience of the global economy despite extreme pressures, the loose monetary policy in most major economies, and the AI-driven investment boom. On the negative side are the dramatic slowdown in world trade, escalating geopolitical conflicts, high levels of public debt, and the latent threat of a correction in overvalued technology markets.
The most likely scenario is one that ACCA Chief Economist Jonathan Ashworth describes as steady but fragile growth. The global economy will grow by just over three percent, supported by loose monetary policy, fiscal stimulus, and the AI ​​boom. But it is a fragile environment in which heightened geopolitical tensions, trade fragmentation, rising public debt, and highly valued financial markets make the global economy vulnerable to shocks. Industrialized nations are facing their lowest growth rates since 2008. The bottom has not yet been reached, but an uncontrolled collapse is also not the most likely scenario. The global economy is in a fragile equilibrium that can be disrupted at any time by any of the numerous geopolitical flashpoints. The next few months will be crucial, particularly the development of the conflict with Iran, the outcome of the US tariff dispute before the Supreme Court, and the ability of central banks to navigate between fighting inflation and supporting growth.