2026: Uncertainty demands strategic adaptation

DAR ES SALAAM: WITH 2026 on the horizon, global stakeholders are recalibrating strategies to address potential economic disruptions. This highlights policy changes, market dynamics and geopolitical developments could collectively redefine growth patterns and investment priorities.

Unlike previous eras, today’s economic unpredictability stems not only from traditional cyclical fluctuations and political rivalries but also from technological disruptions, shifting geopolitical alliances and unforeseen catastrophic events.

These so-called black swan events, though improbable, carry profound economic consequences, with the potential to fundamentally alter national economies, political systems and international norms, challenging policymakers and investors to adapt in an environment where conventional forecasting models may no longer suffice.

In the first place, geopolitical fragility remains a defining uncertainty for the coming decade. The conflict in Ukraine continues to dominate global headlines, but instability is likely to spread beyond Eastern Europe.

The aftermath of the October 7, 2023, IsraelHamas confrontation, though seemingly contained, is expected to reverberate across the Middle East, heightening regional tensions and testing the capacity of global powers to maintain stability.

Meanwhile, nuclear-armed states with unpredictable leadership and fragile nations in Africa and Asia remain susceptible to domestic and cross-border conflicts, creating a precarious international environment. In the second place, the trajectory of global economic growth is equally uncertain.

Following the Covid-19 shock, recovery has been driven largely by technological innovation, particularly artificial intelligence. While AI enhances productivity and transforms industrial structures, it also introduces risks, including potential market bubbles, income inequality and systemic shocks across financial institutions.

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A key question for the next decade is whether AI-led growth can endure amid escalating geopolitical turmoil and global economic volatility. Looking beyond 2025, two key uncertainties: Geopolitics and economic performance frame four potential global scenarios.

A resilient world pairs sustained economic growth with complex geopolitical tensions, while peace and prosperity envisions strong growth alongside reduced international friction.

World stagnates combines slow growth with calmer geopolitics and the time of troubles anticipates economic slowdown amid rising geopolitical turmoil. In reality, elements of all scenarios are likely to coexist, though analysts see the resilient world and time-of-troubles outcomes as most probable.

Post-Covid dynamics suggest a “warring ’20s,” unlike the Roaring ’20s after 1918, with persistent conflicts and strategic uncertainty. Developing economies such as India are driving growth through technology and demographics, while AI contributes significantly to output, accounting for up to 40 per cent of recent US GDP growth.

Yet, reliance on AI risks concentrated bubbles and slowed globalisation highlighted by a 70 per cent drop in Western investment in China since 2022 adds fragility.

The time-of-peril scenario mirrors historical crises, combining regional conflicts, weakened institutions and techdriven economic shocks.

Rising global debt, projected at 100 per cent of GDP by decade’s end, could constrain fiscal responses, fuel protectionism and accelerate deglobalisation, raising the likelihood of geopolitical and economic instability. Coordinated policy action remains critical to navigate these intertwined risks and sustain stability.

Regional conflicts in Ukraine, the Middle East and parts of Asia may intensify amid a fragile global environment, especially if great powers face domestic economic or political constraints. Local disputes could escalate into broader crises, yet opportunities remain: AI and technological innovations can enhance conflict resolution, early warning systems and governance, while emerging economies may drive growth through innovation and demographic trends.

The coming decade will demand strategic forethought and adaptation. Policymakers must plan for simultaneous disruptions, businesses for uneven development and market volatility, and civil society for systemic risks. Uncertainty will define 2026 and beyond; even minor missteps could have wideranging consequences.

Success will depend on strategic flexibility, international cooperation, and careful risk management. The post-pandemic era represents a revolutionary phase of technological promise intertwined with geopolitical fragility.

How governments, institutions and citizens respond will determine whether the decade is marked by resilient adaptation or escalating crises underscoring the need to prepare, build resilience, and embrace complexity.