By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, Sept 11 – Developed by Juwai IQI Global Chief Economist Shan Saeed, the Global Macro Risk Index evaluates ten systemic threats across four analytical dimensions: probability, economic severity, transmission velocity and cross-border contagion.
Its analytical architecture is clear: **Shock → inflation → monetary tightening → currency pressure → sovereign stress → poverty and social unrest.
“The global economy is no longer passing through a conventional business cycle,” Saeed said.
“It is operating within a structural risk cycle in which geopolitical fragmentation, commodity disruption, technological concentration, fiscal fragility and institutional mistrust reinforce one another.”
The critical policy question, he added, is no longer whether another shock will arrive, but whether national balance sheets and institutions possess sufficient resilience to absorb it.
1. Food-security risk
*The Economist*’s “The Coming Food Catastrophe” identified a structural vulnerability that remains unresolved. An estimated 645 million people faced hunger in 2025, approximately 2.1 billion experienced moderate or severe food insecurity, and 2.7 billion could not afford a healthy diet.
“Conflict, extreme weather, fertiliser shortages and export restrictions can convert an agricultural disruption into an inflation, poverty and political-stability shock,” Saeed said. “Food security is therefore not simply a humanitarian concern; it is a core macroeconomic variable.”
*(Sources: The Economist, FAO, Politico)*
2. Cybersecurity risk
“Cyber risk has migrated from the technology department to the national balance sheet,” Shan said. An industry estimate cited by *Forbes* places potential global cybercrime costs at US$10.5 trillion annually. AI-enabled attacks have increased the speed, sophistication and scalability of threats to banking, payment systems, electricity grids and logistics networks.
“A successful attack on critical infrastructure could become a simultaneous operational, liquidity and confidence crisis,” he pointed.
*(Source: Forbes)*
3. Inflation risk
Inflation is becoming increasingly supply-driven and geopolitically transmitted, Saeed said. Energy shocks, tariffs, defence expenditure and supply-chain duplication can raise prices even as aggregate demand weakens. The IMF projects global inflation at 4.7% in 2026, up from 4.1% in 2025; under an earlier adverse scenario, inflation could rise to 5.4%.
“This is the anatomy of stagflation,” Shan said. “Weaker output, persistent prices and diminishing monetary-policy flexibility.”
*(Sources: IMF, WSJ)*
4. Energy-market risk
Before the conflict, approximately 21.6 million barrels a day of petroleum liquids passed through the Strait of Hormuz; flows fell to about 4.9 million barrels a day in the second quarter of 2026. The *Financial Times* subsequently reported Brent near US$95, European gas above €75 per megawatt-hour and EU gas storage at approximately 63%.
“Energy insecurity now transmits directly into inflation expectations, industrial competitiveness, trade balances and fiscal subsidies,” Shan said.
*(Sources: EIA, FT, McKinsey)*
5. Emerging-market currency risk
Dollar volatility, elevated global yields and larger commodity-import bills can trigger capital outflows, imported inflation and heavier foreign-currency debt burdens. BIS research shows that emerging economies combining significant dollar liabilities with shallow foreign-exchange markets face particularly restrictive policy trade-offs.
“Currency weakness can compel central banks to tighten precisely when employment and domestic demand require support,” Shan said.
*(Sources: BIS, Foreign Policy)*
6. Geopolitical risk
Wars, sanctions, tariffs and technology controls are reorganising globalisation around strategic alignment rather than comparative advantage. McKinsey finds that business leaders rank geopolitical and trade instability above macroeconomic volatility, cybersecurity and technological disruption as threats to growth, yet only 28% consider their geopolitical capabilities effective in supporting decision-making.
The US–Iran conflict illustrates the transmission mechanism. Based on global oil consumption of approximately 104 million barrels a day, a sustained war-related premium of US$15–30 per barrel would annualise to roughly US$570 billion–US$1.14 trillion in additional gross oil expenditure.
“This is an analytical energy-cost scenario, not an audited estimate of the war’s total economic damage,” Shan cautioned. “But it demonstrates how a regional confrontation can transfer an enormous financial burden to consumers, businesses and energy-importing economies worldwide.”
(Sources: IEA, McKinsey, Foreign Policy)*
## 7. Sovereign-default risk
Global public debt reached almost 94% of GDP in 2025 and is projected to reach 100% by 2029. The *Financial Times* estimates that the recent yield surge has already added approximately US$16 billion to G7 borrowing costs, potentially rising to US$34 billion by early 2027 if yields remain elevated.
“The threat extends beyond formal default,” Shan said. “Higher refinancing costs can produce fiscal dominance, austerity, bond-market dysfunction and an erosion of sovereign credibility.”
*(Sources: IMF, FT)*
## 8. Lower-growth and poverty risk
*The Economist*’s *World Ahead 2026* warned that tariffs, excessive borrowing and slower growth were darkening the outlook. The UN subsequently projected global expansion of only 2.5% in 2026, one of the weakest non-crisis growth rates this century.
According to Shan, for poorer, energy-importing economies, weak per-capita growth means fewer jobs, lower tax revenue, diminished social protection and slower poverty reduction. The headline GDP figure therefore understates the deterioration in household economic security.”
*(Sources: The Economist, WSJ)*
9. Economic-model risk
Conventional models assume broadly stable relationships among inflation, output, employment and interest rates. Those assumptions weaken when war closes trade corridors, AI concentrates capital expenditure and governments override price signals. *The Atlantic* describes an increasingly bifurcated global economy: technology-linked countries may remain resilient while poorer energy importers absorb disproportionate damage.
“Aggregate forecasts can consequently appear stable while concealing severe distributional and regional fractures,” Shan said.
*(Source: The Atlantic)*
10. Social-unrest risk
“Social unrest is the index’s terminal transmission channel,” Shan said. “When food and energy inflation collide with unemployment, inequality and fiscal retrenchment, macroeconomic stress migrates from balance sheets to the street.” Political instability then feeds back into investment, currencies, capital flight and sovereign risk – completing the adverse loop.
“Ultimately, economics determines social stability everywhere,” Shan said. “When people cannot find employment, afford food or preserve a meaningful sense of purpose, economic deprivation becomes an excruciating human agony and a combustible political force.”
“The conclusion of the Global Macro Risk Index is unequivocal,” Shan said. “The next global crisis may originate in food, energy, cyberspace, geopolitics or sovereign debt, but contagion will travel through currencies, capital markets, governments and society. Macroeconomic stability, institutional credibility, economic order and national resilience are not instruments of short-term efficiency. Together, they constitute the decisive strategic premium for a country.”
- TNS NEWS