Economic Survey 2026: 3 global scenarios that stock market, gold investors must know

The Economic Survey 2026, released on Thursday, flagged concerns around global growth, noting that the negative effects of ongoing global political and economic turmoil could materialise with a lag. The survey outlined three global scenarios that could play out in 2026 and assigned probabilities to each scenario. 

Fragility, uncertainty and episodic shocks, the survey said, are increasingly structural features of the system, and the balance of risks has shifted perceptibly over the past year. 

"Geopolitical competition has intensified, the security environment in Europe has become increasingly complex, and financial vulnerabilities associated with leveraged technology investments are looming. Trade policy is now shaped primarily by security and political considerations rather than efficiency or multilateral rules," it said ahead of Union Budget 2026 on February 1.

Taken together, the Economic Survey suggested that these developments suggest a world that is less coordinated, more risk-averse, and more exposed to non-linear outcomes with a narrower margin of safety.

"Financial markets are already pricing this fragility. Gold rose from $2,607 to $4,315 per ounce in 2025, reflecting a weakening US dollar, expectations of persistently negative real rates, and the market’s growing assessment of geopolitical and financial tail risks," it said.

Scenario 1

The Economic Survey said the best-case scenario for the world in 2026 is ‘business as in 2025’, but one that becomes increasingly less secure and more fragile. 

"In this setting, with the margin of safety being thinner, minor shocks can escalate into larger reverberations. Financial stress episodes, trade frictions, and geopolitical escalations do not lead to systemic collapse, but they do create volatility and require governments to intervene more actively to stabilise expectations."

This scenario, the survey said, is less about continuity and more about managed disorder, with countries operating in a world that remains integrated yet increasingly distrustful. 

The survey attached a subjective probability of around 40-45 per cent to this scenario unfolding in 2026. 

Reflecting this is the Global Economic Policy Uncertainty Index, which is near its worst readings of 2020, excluding the sharp spike in April 2025 at the introduction of the reciprocal tariffs. 

Scenario 2

In its second scenario, the survey said the probability of a disorderly multipolar breakdown rises materially and cannot be treated as a tail risk. 

"Under this outcome, strategic rivalry intensifies, the Russia–Ukraine conflict remains unresolved in a destabilising form, and collective security arrangements unravel. Trade becomes increasingly explicitly coercive, sanctions and countermeasures proliferate, supply chains are realigned under political pressure, and financial stress events are transmitted across borders with fewer buffers and weaker institutional shock absorbers."

In this world, the survey said policy becomes more nationalised, and countries face sharper tradeoffs between autonomy, growth, and stability. It attached a probability of around 40-45 per cent to this scenario as well.

Scenario 3

The third scenario with a residual probability of 10-20 per cent, involving the risk of a systemic shock cascade in which financial, technological, and geopolitical stresses amplify one another rather than unfolding independently. 

"The recent phase of highly leveraged AI-infrastructure investment has exposed business models that are dependent on optimistic execution timelines, narrow customer concentration, and long duration capital commitments."

"A correction in this segment would not end technological adoption, but it could tighten financial conditions, trigger risk aversion and spill over into broader capital markets. If such developments were to coincide with geopolitical escalation or trade disruption, the resulting interaction could produce a sharper contraction in liquidity, a sudden weakening of capital flows, and a shift toward defensive economic responses across regions."

While this remains a lower-probability scenario, the survey said consequences would be significantly asymmetric. 

"The macroeconomic consequences could be worse than those of the 2008 global financial crisis. Running a marathon and sprint at the same time In all three scenarios, India is relatively better off than most other countries due to its strong macroeconomic fundamentals, but this does not guarantee insulation," it concluded.