Economic conflicts are world's greatest risk, WEF survey suggests

• Economic sanctions and trade conflicts have intensified, including Western sanctions on Russia after Ukraine's invasion and growing concerns over China's control of rare earth metals critical to technology supply chains
• The WEF warns that 'rules and institutions that have long underpinned stability are under siege' as trade, finance, and technology are increasingly weaponized for geopolitical influence
• Next week's Davos summit will host over 60 heads of state under the theme 'a spirit of dialogue,' though tensions are high as the US president continues trade conflicts and has withdrawn from the Paris climate agreement

Summary

Key Findings:

The World Economic Forum's (WEF) annual Global Risks Report reveals economic conflicts between major powers as the world's most pressing short-term threat. Based on a survey of 1,300 business leaders, academics, and civil society figures ahead of next week's Davos summit:

Two-Year Outlook:

• Geoeconomic confrontation: 18% of respondents (top risk)
• State-based armed conflict: 14%
• Extreme weather events: 8%

Ten-Year Outlook:

Climate-related risks dominate long-term concerns:

1. Extreme weather events
2. Biodiversity loss and ecosystem collapse
3. Critical changes to Earth systems

Market Context:

Economic sanctions have become increasingly common tools of statecraft, notably following Russia's Ukraine invasion. Growing tensions center on access to critical resources, particularly rare earth metals essential for tech products—largely controlled by China. G7 finance ministers met Monday in Washington to discuss supply chain diversification strategies, with US Treasury Secretary Scott Bessent warning of vulnerabilities in critical mineral supply chains.

Key Events:

The annual Davos meeting begins next week with over 60 heads of state attending, themed "a spirit of dialogue." Notable attendees include US President Trump (whose administration has pursued aggressive trade policies and withdrawn from the Paris climate agreement), German Chancellor Friedrich Merz, Chinese Vice-Premier He Lifeng, Ukrainian President Zelenskyy, and Argentine President Milei.

Implications:

The WEF warns that "rules and institutions that have long underpinned stability are under siege" as trade, finance, and technology increasingly serve as weapons of influence in a fragmenting global order.