POLY-CRISIS - WHEN EVERYTHING THAT CAN GO WRONG GOES WRONG

Global Affairs Session 34 12 May 2026

POLYCRISIS

A perfect storm

A polycrisis is not one crisis but many, interacting and reinforcing each other — war, climate shocks, inflation, debt, migration, technology disruption, pandemics and political instability all compounding at once. This session maps how that mix is reshaping global order in 2026, what it means for India's energy security, inflation and growth, the worst-case scenarios it could produce, and the resilience strategies that offer a way through.

Overview Polycrisis Global order Impact on India Worst outcome possible Mitigation possible

Overview

A polycrisis is not one crisis, but many crises interacting together — war, climate shocks, inflation, debt, migration, technology disruption, pandemics, and political instability. The world in 2026 is living through several of these at once, and each one is making the others worse.

Polycrisis

A polycrisis is not one crisis, but many crises interacting together — war, climate shocks, inflation, debt, migration, technology disruption, pandemics, and political instability.

• Key idea is interconnection. One crisis worsens another. For example, a war can raise oil prices, which raises inflation, which increases public anger, which weakens governments.
• Different from a normal crisis because the system has less room to recover. Governments, markets, societies, and institutions are hit from many directions at once.
• Polycrisis creates cascading effects. Climate shocks can damage food supply; food inflation can cause protests; protests can create political instability; instability can hurt investment.
• Reflects a world of high complexity and low trust, where global cooperation is weaker just when global problems need more cooperation. The World Economic Forum's 2026 Global Risks Report describes a world shaped by wars, economic weapons, societal fragmentation, and multiple concurrent risks.

How it affects Global Order (2026)

Global power is becoming more fragmented. The US-led order is no longer uncontested; China, Russia, regional powers, and middle powers are all trying to shape rules.

• Economic interdependence is being weaponized through sanctions, tariffs, export controls, supply-chain restrictions, technology bans, and financial pressure.
• Wars and security blocs are becoming more important than trade optimism. Ukraine, the Middle East, Taiwan tensions, Red Sea disruptions, and cyber conflict all affect global decision-making.
• Global institutions look weaker because the UN, WTO, climate negotiations, and financial institutions struggle to enforce cooperation when major powers disagree.
• Growth remains fragile. The IMF projected global growth of about 3.1% in 2026, below recent outcomes, under assumptions of limited conflict, showing that the global economy is vulnerable to further shocks.

How it affects India

India faces higher energy vulnerability because it imports much of its oil and gas. Middle East conflict and shipping disruptions can raise fuel prices, widen the current account deficit, and pressure the rupee.

• Inflation can return through food and fuel channels. India's April 2026 retail inflation rose to 3.48%, with food prices and global energy risks being important pressures.
• Exports and supply chains may suffer if global demand slows, tariffs rise, or shipping routes become unstable. This affects manufacturing, IT services, textiles, chemicals, and MSMEs.
• Climate shocks become a domestic economic risk. Heatwaves, weak monsoon, floods, water stress, and crop damage can affect food prices, rural income, health, power demand, and migration.
• India still has opportunity. The World Bank projected India's growth at 6.6% in FY27, slower due to energy and supply-chain pressures, but still among the fastest-growing major economies.
• Latest development: in his 29 March 2026 Mann Ki Baat address, Prime Minister Modi warned that the war-hit region is central to India's energy needs and can trigger a wider petrol-diesel crisis, making energy security even more urgent.

Worst outcome possible

A wider war scenario: Ukraine, the Middle East, Taiwan, cyberattacks, and proxy conflicts escalate at the same time, forcing countries into hostile blocs.

• A global stagflation shock: energy and food prices rise while growth slows, creating the dangerous combination of inflation, unemployment, and weak investment.
• Debt crises in vulnerable countries: high interest rates, weak currencies, food imports, and energy bills push poorer economies toward default, social unrest, and IMF bailouts.
• Climate-security breakdown: extreme heat, floods, droughts, crop failures, and water stress trigger internal migration, border tensions, and urban instability.
• Technological disruption without governance: AI-driven misinformation, cyberattacks, job displacement, autonomous weapons, and financial-system vulnerabilities create new forms of instability.

Mitigation possible

Build resilience, not just efficiency. Countries and companies must diversify supply chains, energy sources, food imports, data systems, and financial exposure.

• Invest in energy security through renewables, storage, nuclear, strategic petroleum reserves, grid modernization, and reduced dependence on unstable regions.
• Strengthen food and climate resilience with water management, heat-action plans, climate-resilient crops, crop insurance, better storage, and early-warning systems.
• Improve financial buffers by reducing unsustainable debt, building foreign-exchange reserves, protecting banks, and creating emergency support for vulnerable households.
• Create new cooperation among middle powers. Even if big powers compete, countries like India can work through G20, BRICS, Quad, Global South platforms, and regional partnerships to keep trade, climate action, health security, and technology governance alive.

Value addition

Glossary and related terms

Polycrisis

Multiple interacting crises that reinforce each other, so the combined effect is more disruptive than any single crisis alone.

Cascading effects

A chain reaction in which the impact of one shock triggers, worsens, or accelerates another, often across unrelated sectors.

Systemic risk

The danger that failure in one part of an interconnected system, such as finance or supply chains, spreads to threaten the whole system.

Stagflation

The combination of slow economic growth, high unemployment, and persistently rising prices.

Current account deficit

A situation where a country's imports of goods, services, and transfers exceed its exports.

Strategic chokepoint

A narrow route or critical link, such as a shipping corridor or energy supply line, whose disruption produces effects far beyond its immediate geography.

De-risking

A strategy of reducing exposure to a specific country, supplier, or market rather than withdrawing from it entirely.

Global Risks Report

The World Economic Forum's annual assessment ranking the most severe risks facing the world over given time horizons.

Middle powers

States with meaningful but not dominant global influence that can shape outcomes through coalitions rather than unilateral strength.

Resilience

The capacity of a system, economy, or society to absorb shocks and continue functioning, as distinct from mere efficiency.

Burden-sharing

The distribution of security, financial, or diplomatic responsibilities among several partners rather than one dominant power.

MSME

Micro, Small and Medium Enterprises — smaller businesses often especially exposed to global trade and financing shocks.

Hedging

Maintaining relationships with competing powers so that a state is not excessively dependent on any single partner.

Grid modernization

Upgrading electricity transmission and distribution systems to improve reliability, efficiency, and integration of new energy sources.

Value addition

Conceptual references

• World Economic Forum Global Risks Report and its framework for ranking systemic and interconnected risks.
• IMF and World Bank growth projections for the global economy and India in 2026.
• Literature on cascading risk, systemic risk, and resilience in complex interconnected systems.
• Analysis of economic statecraft: sanctions, tariffs, export controls, and supply-chain weaponization.
• Debates on middle-power cooperation through the G20, BRICS, Quad, and Global South platforms.