The World Economic Forum says global economies are “balancing on a precipice,” as multiple risks are set to be discussed at the annual meeting of world leaders in Davos, Switzerland this week.
“Geoeconomic confrontation” was cited as the highest risk this 12 months and in the subsequent two years, in keeping with respondents in a WEF survey, catapulting several spots within the rankings from a 12 months earlier.
“As we enter 2026, the world is balancing on a precipice. The turmoil brought on by kinetic wars alongside deployment of economic weapons for strategic advantage is continuous to fragment societies,” the WEF said in its Global Risks 2026 report.
“Rules and institutions which have long underpinned stability are under siege in a brand new era during which trade, finance and technology are wielded as weapons of influence.”
This comes as U.S. President Donald Trump escalates his global trade war and sweeping tariff policies against countries around the globe, including Canada and China.
He has also threatened to extend tariffs on European nations for rejecting his repeated demands that Greenland turn out to be a part of the U.S. for “national security” interests, a move Prime Minister Mark Carney called an “escalation.”
Trump has pushed the concept the U.S. may take the island, which is a territory of NATO ally Denmark, by force and refused to rule out that option in an interview with NBC News on Monday.
The WEF report was based on data collected within the annual Global Risks Perception Survey, which was conducted over several weeks from August through September 2025 and asked about 1,300 experts in academia, business, government, international organizations and civil society about their perception of the “global risks” landscape.
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Eighteen per cent of survey participants said geoeconomic confrontation was the highest risk in 2026 of triggering a “material global crisis,” and that’s up from the third most definitely risk in 2025.
For a two-year outlook, geoeconomic confrontation was also considered the most important risk through 2028, which the report says was up eight spots from last 12 months’s study.
The WEF defines “global risk” as “the potential of the occurrence of an event or condition that, if it occurs, would negatively impact a major proportion of worldwide GDP, population or natural resources.”
“In a world already weakened by rising rivalries, unstable supply chains and prolonged conflicts liable to regional spillover, such confrontation carries systemic, deliberate and far-reaching global consequences, increasing state fragility,” the report said.
“We highlighted the danger of geoeconomic tensions escalating, pointing to a particular set of risks around trade and tariffs, but in addition noting that these needs to be considered a part of a broader divergence between West, East and South, albeit with many countries forging their very own pathways and balancing relationships with the several sides.”
Over the subsequent two years, the WEF also cites america and China, the world’s strongest economies, as being “most closely watched” with regards to governments using “economic levers” to construct national security on a worldwide scale to advance their “geopolitical interests.”
The second biggest risk respondents cited within the survey was “state-based armed conflict,” with 14 per cent of the vote — although no specific conflicts were mentioned.
This comes because the war between Russia and Ukraine continues to evolve and increase security risks within the Arctic region, and within the aftermath of Israel’s conflict with Hamas, amongst other global conflicts with larger geopolitical implications.
The U.S. also launched strikes on Venezuela, which led to the capture of President Nicolas Maduro and increased the danger of political instability within the nation.
Trump also threatened that the U.S. may get entangled in Iran after nationwide protests led to reports of greater than 2,000 people being killed. That included a Canadian citizen.
Other risks the WEF survey respondents were asked to rank included extreme weather events (eight per cent), societal polarization (seven per cent), misinformation and disinformation (seven per cent), economic downturn (five per cent) and the erosion of human rights and/or civic freedoms (4 per cent).
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