The Economic Survey 2026, released on Thursday, highlights a rising and serious fragility in the global economic framework amid escalating geopolitical tensions and economic uncertainty. Although global growth and trade have so far remained more stable than anticipated, the Survey cautions that this apparent resilience could be misleading, as adverse impacts may emerge with a delay.
The report warns of three potential outcomes for global financial markets, including a low-probability but severe crisis that could surpass the scale of the 2008 global financial crisis. It points to intensifying geopolitical rivalries, a more volatile security situation in Europe, increasing financial risks linked to highly leveraged technology investments, and trade policies increasingly shaped by political interests rather than economic efficiency.
According to the Survey, the first and most optimistic scenario—assigned a 40–45 percent probability—envisions conditions similar to 2025, though with reduced safeguards and a higher risk of small disruptions triggering broader instability. The second scenario, also carrying a 40–45 percent likelihood, involves a disorderly shift toward a fragmented multipolar world. In this case, unresolved conflicts such as the Russia–Ukraine war, growing use of sanctions, politicised trade, and pressured supply chain realignments could amplify cross-border financial stress amid weaker institutional support systems.
A key concern across scenarios is the rapid accumulation of leverage in artificial intelligence and technology infrastructure, which relies on optimistic assumptions and long-term capital commitments. Any correction in this space could tighten global liquidity and spread stress across financial markets.
Despite these risks, the Survey notes that India remains comparatively resilient due to strong macroeconomic fundamentals, a large domestic market, and ample foreign exchange reserves. However, disruptions to capital flows and pressure on the rupee remain shared risks. The Survey concludes that India must adopt a balanced approach in 2026, focusing on growth while strengthening buffers to absorb external shocks.
