What are the most dangerous challenges facing the global economy?

SadaNews - A report on global risks for 2026 has warned of the global economy entering a phase where geopolitical and economic risks are escalating, amid a continued slowdown in global growth and declining forecasts related to job growth.

The report, issued by the World Economic Forum, stated that trade tensions and reciprocal tariffs between countries have become a pressing factor complicating the global economic landscape.

The report, which coincides with the current session of the Davos Forum in Switzerland, is considered one of the most significant foresight studies, as it is based on a survey of over 1,300 global experts from various sectors, in addition to an analysis of economic, social, and political data.

It pointed out that what it described as "geo-economic collision" has become one of the most prominent future challenges, replacing the armed conflict that was considered the biggest danger in past years. This collision includes imposing trade restrictions, customs barriers, and controlling supply chains.

Rising Risks

The report warned that the escalation of this type of conflict would have direct repercussions on the global economy, by slowing down growth and increasing the likelihood of recessions, a view supported by IMF forecasts projecting global economic growth of around 3.1% only, a level lower than the average growth over the past two decades.

It also ranked political and social risks as the second most pressing issue, driven by the exacerbation of inequality in the distribution of wealth and economic opportunities, while technological and digital risks came in third place, amid a rapid boom in artificial intelligence and the accompanying challenges related to cybersecurity, misinformation, and the transformation of job levels.

Data reveals that global spending on artificial intelligence will rise by over 40% to reach about $2.5 trillion within a year, driven by increased investments in servers and software.

In contrast, environmental and climatic risks fell to fourth place, despite their ongoing dangers, as the German Potsdam Institute warned that climate change could lead to a loss of nearly one-fifth of global income over the next 25 years.

Growth Slowdown

Mark Elsner, the writer and editor of the global risks report, said in a statement to Al Jazeera that the geo-economic confrontation is no longer limited to traditional tools like tariffs but now includes controlling exports, imposing restrictions on imports, and limiting technology exports.

Elsner added that the prominence of this type of confrontation on the risk list for 2026 is due to its direct impact in the short term, while climate risks remain the most dangerous in the long term.

He asserted that these risks are of a global and regional nature, not limited to developed countries, but their effects extend to developing countries, making international cooperation a shared necessity.

The report's author concluded with a warning that the escalation of geo-economic risks, along with the slowdown in economic growth, rising inflation, and the likelihood of price bubbles, signals a phase of global economic instability in the next two years in the absence of a coordinated international response.

Source: Al Jazeera