Surfers looking at the stormy ocean from the cliff during winter surfing session

Top 10 geopolitical developments in 2026

Authors

Oliver Jones

EY-Parthenon Global Client Insight and Research Leader and EY-Parthenon Global Geostrategic Business Group Leader
Courtney Rickert McCaffrey

EY Global Geostrategy Insights Leader; Director, Business and CXO Insights, Ernst & Young LLP

Contributors

5 minute read 11 Dec 2025

Innovation will be required to build resilience and maintain competitive advantage in a dynamic geopolitical environment.

In brief

The EY-Parthenon 2026 Geostrategic Outlook examines how geopolitics will create opportunities and challenges in the year ahead.
Three key themes will interact in various ways throughout the year, with implications that will reverberate across geographies and sectors.
Likely disruptions to supply chains, capital markets and other areas require executives to anticipate geopolitical trends and build resilience to them.

Nearly 75% of CEOs are either localizing or have localized some part of their production within the country of sale, according to the September edition of the EY-Parthenon CEO Outlook. Just over half are reorganizing supply chains to serve a particular regional bloc. These strategic shifts demonstrate how geopolitics is fundamentally changing the global operating environment.

We expect geopolitical volatility to persist in 2026. There will be many underlying drivers of these and other developments, but the role of the US in reshaping the global operating environment in 2026 will be highly significant. As China, the EU and other actors react and adapt to this new US posture throughout 2026, while continuing to shape their own agendas, the global operating environment will continue to evolve.

This will pose both challenges and opportunities for organizations around the world, influencing how executives manage risks, govern their organizations and set strategy. As in past years, the 2026 Geostrategic Outlook is designed to enable executives to incorporate geopolitical analysis into the decisions they make about these and other aspects of their business. As explored in the EY-Parthenon Geostrategy in Practice study, companies that do this well improve their resilience to geopolitical volatility and position themselves to gain a competitive advantage.

The annual Geostrategic Outlook presents analysis by the EY-Parthenon Geostrategic Business Group (GBG), a network of geopolitical risk professionals around the globe with backgrounds in political risk, government policy, the public sector, strategy and academia.

The GBG first conducted a broad horizon-scanning exercise to identify potential political risks. The scanning exercise drew on inputs from multiple internal and external data and research sources. The GBG also collected input from more than 50 individuals across EY teams, including those focused on public policy, strategy, macro trends and sector-level developments.

Next, the GBG assessed all the identified political risks along two dimensions: their probability of occurring and the degree to which they would have impact on companies across sectors and geographies globally. The top 10 geopolitical developments included in this Outlook are those that were assessed to be both high probability and high impact, broadly speaking for global organizations.

This Outlook includes analysis of the market disruptions — both downside and upside — of the 10 developments across 18 sectors, and it includes recommended actions that executives can take to manage each geopolitical development in a strategic and proactive manner.

The 2026 Geostrategic Outlook

Download the full report to explore how geopolitics is driving global transformation.

Please fill in your information to gain access to our report.

The 2026 Geostrategic Outlook

Geopolitical developments will continue to reshape the global operating environment in profound ways. Looking across all the expected changes, we identify 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. Select each development below to learn more.

An interactive illustration of the top 10 geopolitical developments in the 2026 Geostrategic Outlook. Those developments are:

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 centers — 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 defense 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.

Each of the developments explored in the 2026 Geostrategic Outlook will impact organizations in unique ways and will necessitate specific geostrategic actions to capitalize on the opportunities they present while also mitigating the risks they pose. The type and level of impact will depend on an organization’s sector and geographic footprint and the strategic choices that its executives make. Select the tiles below to find out how leaders across industries can prepare for geopolitical disruption and shape their future with confidence.

An interactive illustration of the high-level industry implications of the top 10 developments. Those implications are:

Consumer and health

Persistent trade policy volatility and supply chain realignment will put pressure on costs and consumer spending, while sovereign AI and cyber conflicts heighten risks around data privacy and intellectual property (IP). Life sciences companies face heightened complexity as governments view the sector as important for economic security.

Financial services

Geopolitical fragmentation will drive regionalization. Financial services firms must adapt to uneven rules, rising cyber threats and state-driven investment priorities. Success will hinge on balancing resilience with innovation and leveraging AI and digital capabilities amid an increasingly fractured global landscape.

Government and infrastructure

Geopolitics will drive infrastructure investment as governments prioritize resilience and digital sovereignty. Public projects will focus on energy, defense and cyber-secure systems, but resource constraints — such as water scarcity and critical minerals — will challenge timelines and costs. Governments will therefore seek new foreign partnerships and domestic investments.

Industrials and energy

Geopolitical competition for resources will dominate. Supply chain volatility — driven by critical minerals scarcity, trade restrictions and disrupted energy routes — will challenge operations and pricing. State interventionism will reshape investment, operations and innovation strategies.

Private equity

The expected continued uncertainty in trade policies in major markets will continue to make it difficult for private equity (PE) firms to price deals accurately and build confidence in cross-border models. Geopolitical developments will also be significant drivers of the opportunity set and firms’ investment theses.

Technology, media & entertainment and telecommunications

Geopolitics surrounding AI and cyber will drive market fragmentation and compliance complexity. Government policies may reshape investment strategies. Energy and critical mineral constraints may add pressure, forcing firms to balance innovation with resilience in an increasingly fractured digital ecosystem.

The 2026 Geostrategic Outlook is the eighth edition of this annual 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. Amid the year-to-year volatility; day-to-day volatility, a few consistent trends stand out. The most prominent trend is 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.

Return to the top to access the full report

Explore Geostrategic Outlooks from previous years

Top 10 geopolitical developments for 2025

Geopolitical risk will remain elevated due to economic sovereignty and global rivalries. Learn how to manage the uncertainty to grow your business.

Courtney Rickert McCaffrey + 1

Top 10 geopolitical developments for 2024

An even more complex geopolitical environment is on the horizon. Learn how businesses need to innovate and adapt their strategies to stay ahead.

Courtney Rickert McCaffrey + 2

How to shift strategy for a new geostrategic era in 2023

Explore how analyzing 2023 geopolitical developments will enable companies to make better strategic decisions. Read more.

Courtney Rickert McCaffrey + 1

The pace of Geopolitical developments is accelerating. As a result, the elevated level of geopolitical risk is creating both challenges and opportunities for global organizations. For those who don’t want to be left behind, the time to act and prepare for these developments is now. Join the EY-Parthenon Geostrategic Business Group bi-weekly, as they discuss the leading trends they are seeing, explore the impact of Geopolitical developments on sectors and markets around the world, plus provide practical advice for organizations developing a geostrategy today.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

EY-Parthenon is a brand under which a number of EY member firms across the globe provide strategy consulting services.

Insights

Highlights

Top 10 geopolitical developments in 2026

Innovation will be required to build resilience and maintain competitive advantage in a dynamic geopolitical environment.

About the Geostrategic Outlook

The 2026 Geostrategic Outlook

The 2026 Geostrategic Outlook