Uncertain Of Global Turmoil, Survey Projects Three Scenarios For 2026

Chennai: Amidst heightened levels of uncertainty created by geo-political and economic turmoil, the Economic Survey is unable to project one possible scenario for 2026. Instead, it chose to present three scenarios – all of them anticipating the risks of countries at varied levels while navigating through a fragile ecosystem.

The best-case scenario for the world in 2026 is ‘business as in 2025’, but one that becomes increasingly less secure and more fragile. In this setting, with the margin of safety being thinner, minor shocks can escalate into larger reverberations. Financial stress episodes, trade frictions, and geopolitical escalations do not lead to systemic collapse, but they do create volatility and require governments to intervene more actively to stabilise expectations. Countries will operate in a world that remains integrated yet increasingly distrustful with a probability of around 40 to 45 per cent to this scenario unfolding in 2026.

In the second scenario probability of a disorderly multi-polar breakdown rises materially and cannot be treated as a tail risk. Under this outcome, strategic rivalry intensifies, the Russia–Ukraine conflict remains unresolved in a destabilising form, and collective security arrangements unravel. Trade becomes increasingly explicitly coercive, sanctions and countermeasures proliferate, supply chains are realigned under political pressure, and financial stress events are transmitted across borders with fewer buffers and weaker institutional shock absorbers. There is a probability of around 40 to 45 per cent to this scenario as well.

In the third scenario, with a residual probability of 10-20 per cent, the risk of a systemic shock cascade in which financial, technological, and geopolitical stresses amplify one another rather than unfolding independently. A correction in the highly leveraged AI-infrastructure investment would not just end technological adoption, but it could tighten financial conditions, trigger risk aversion and spill over into broader capital markets.

If such developments were to coincide with geopolitical escalation or trade disruption, the resulting interaction could produce a sharper contraction in liquidity, a sudden weakening of capital flows, and a shift toward defensive economic responses across regions. While this remains a lower-probability scenario, its consequences would be significantly asymmetric. The macroeconomic consequences could be worse than those of the 2008 global financial crisis.