The global business landscape is entering a new phase of heightened uncertainty and transformation, with geopolitics emerging as a dominant factor shaping the global operating environment, according to the EY (Ernst & Young) 2026 Geostrategic Outlook.
“Geopolitical developments will continue to reshape the global operating environment in profound ways,” said the report.
EY identifies three core themes that will define the geopolitical environment in the year ahead.
“First, new rules and norms for doing business will emerge – and old rules and norms will be discarded. Second, the geopolitics of scarcity will solidify. The third theme is a recognition that there will be four key regions in which these geopolitical dynamics play out in 2026. We refer to this as spheres of engagement.”
Europe at a crossroads
The report identifies ten critical geopolitical developments that are set to define the year, grouped under the three main pillars referred to above:
1. State interventionism
Governments will use industrial subsidies, restrictive trade policies, ownership stakes in companies and local investment mandates to try to improve their country’s economic security.
2. Trade under pressure
Governments will enact new trade policies — including tariffs, export controls and local content requirements – to mandate or incentivize companies to modify existing supply chains and trade patterns.
3. Sovereign AI and cyber conflicts
Governments will increasingly treat AI assets as a national security priority and an important piece of critical infrastructure. And AI will serve as a force multiplier of cyber conflicts.
4. Water scarcity
As freshwater scarcity grows in markets around the world – and demand for water increases for semiconductor manufacturing and cooling data centres – more water rights conflicts will arise.
5. Critical minerals rush
Geopolitical competition to gain or retain access to critical minerals for digital technologies, high-capacity batteries and defence systems will lead to new production and trade patterns.
6. Debt, capital and currencies
Geopolitical competition and the growing politicization of capital allocation – including a fiscal dominance trend in some markets – are set to intensify, reshaping the contours of the global financial system.
7. North America: Policy volatility
The North American operating environment will continue to be volatile, with the US-Mexico-Canada (USMCA) trade agreement review reshaping regional supply chains.
8. Asia-Pacific: Economic security
Governments will double down on economic security, balancing regional economic integration with national security amid increasing multipolarity.
9. Europe: At a crossroads
The shifting global order and internal political divisions pose challenges to Europe’s national security and economic competitiveness.
10. Middle East: Recalibration
Regional and global actors will recalibrate their positions in the region, heightening economic competition.
Geopolitical relations “more conflictual”
EY notes that this is the eighth edition of the annual Geostrategic Outlook publication. “During these eight years, the multipolar world has solidified in significant ways. Geopolitical relations have become more conflictual and government policies have focused more on national security goals rather than purely economic ones,” it says.
Amid the volatility, EY notes a few consistent trends, the most prominent being governments’ continued efforts to improve their economic security or economic sovereignty, including de-risking and onshoring supply chains for critical products and strategic sectors.
“It is no surprise that operations and supply chains have consistently been the functional area most impacted by geopolitics in recent years – a trend we expect to continue in 2026,” said EY.
Commenting on the findings, Giorgos Papadimitriou, CEO of EY Greece, said:
“The world is entering a period of heightened uncertainty in 2026, driven by a series of disruptive, accelerating and interconnected forces. The ten global fault lines identified in the report clearly illustrate the scale of the challenges organisations will face.”
Sources: EY 2026 Geostrategic Outlook, CNA