Four economic risks that could define 2026
From an AI bubble to mounting debt, analysts warn of looming global threats.
The bursting of an AI bubble, rising prices, and public debt spiraling out of control, these scenarios, all carrying significant negative consequences, have been identified by analysts and research firms as some of the main economic risks facing the global economy in 2026. While new-year forecasts are largely optimistic when it comes to economic growth, it is difficult to ignore the obstacles and the many things that could still go wrong. Other risks include an increase in cyberattacks, a deepening climate crisis, and a surge in oil prices. However, these four stand out as the most prominent threats.
The bursting of the AI bubble:
Fears that the AI boom could burst, much like the high-tech bubble at the beginning of the millennium, have intensified this year amid massive corporate investments in the field. This pressure has already contributed to temporary declines in the share prices of major technology companies. Nevertheless, large-scale investment is almost certain to continue. Major technology companies are expected to invest more than $533 billion in AI infrastructure in 2026, an increase of 34% compared to this year.
The central question troubling analysts is whether companies will ultimately be able to generate sufficient profits from these investments. According to Torsten Slok, chief economist at Apollo Global Management, there is a real risk that enthusiasm around artificial intelligence is exaggerated and that the bubble could burst within the next year.
If this scenario materializes, Slok warns, it would likely lead to sharp declines in the share prices of large technology companies and a pullback in capital spending. The research firm ING adds that a collapse in stock markets would disproportionately hurt wealthier Americans, who hold the lion’s share of equities. The result could be weaker consumption, reduced investment, and a slowdown in the labor market, potentially tipping the U.S. economy into recession.
Geopolitical risks:
Geopolitical uncertainty, including tariffs, export restrictions, and sanctions, is creating widespread disruptions, according to Everbridge. In a recent risk report, the firm warned that such developments are already leading to trade disruptions, shipping delays, and sharp fluctuations in commodity and energy markets.
The relationship between the United States and China remains the primary source of concern. Although the world’s two largest economies have declared a ceasefire in their trade war, it is widely seen as fragile and could unravel at any moment. Any escalation would likely harm the semiconductor, automotive, and defense industries, and could lead to shortages and price increases.
Geopolitical tensions are also weighing on energy markets. The continuation of the war in Ukraine and tighter sanctions on Russia could disrupt global energy supplies. In addition, the oil market will be affected by the U.S. administration’s moves against Venezuela.
Public debt crisis:
Many countries, most notably the United States, are grappling with exceptionally high levels of public debt. The U.S. deficit is expected to remain at 6-7% of GDP, while the debt-to-GDP ratio is projected to exceed 100%. Europe faces similar challenges. France and the United Kingdom are considered particularly vulnerable due to their reliance on foreign investors.
The concern is that elevated debt levels could cause bond investors to lose confidence in governments’ ability to repay, leading to a sharp rise in bond yields and a severe budgetary crisis. Such a scenario would likely force governments to enact painful spending cuts or raise taxes, measures that typically restrain economic growth.
Renewed rise in inflation:
While the prevailing expectation is for inflation to continue its gradual decline in 2026, the risk of renewed inflationary pressure remains real. Several factors could drive a resurgence, including strong demand for AI components that could create new supply-chain bottlenecks, higher energy costs stemming from the war in Ukraine and disruptions involving Venezuela, and political interference in central bank decision-making.
Analysts have voiced particular concern about such interference in the United States, where President Trump is expected to announce the next Federal Reserve chair. A premature interest-rate cut not supported by economic data could reignite inflation. In that case, central banks might be forced to return rates to elevated levels and keep them there for an extended period, a move that would slow economic activity.
Supply chains could also face renewed disruptions as a result of climate change and extreme weather events, such as hurricanes and wildfires, which are becoming increasingly frequent.
