The year 2026 won’t necessarily be defined by new shocks, but by addressing unfinished business from 2025, a year in which the global economy delivered contradictory signals.
According to AICD Chief Economist Mark Thirlwell GAICD, directors should brace for three major risks this year — the delayed impact of global trade disruptions, froth in AI-driven markets and a volatile policy environment at home and abroad.
Thirlwell’s chief piece of advice is to resist complacency and the temptation to assume the worst is already behind us.
“If you want to know where you’re going, you’ve got to understand where you are and where you’re coming from,” he says. “There are a few really big, yet-to-be-answered questions about the nature of this year.”
Investors have become more relaxed about shocks, shaped by two decades during which central banks repeatedly intervened to stabilise markets. But that complacency can be dangerous, cautions Thirlwell.
“The more blasé you get, the more you are at risk of something nasty sideswiping you.”
For directors, the priority is to build organisational resilience ahead of further volatility.
“Be very alert,” Thirlwell says. “Be very risk and opportunity-aware… Have a risk plan in place and be able to roll with the punches.”
In 2025, forecasters expected trade tensions and tariff rounds to significantly dent global growth, but the downturn never fully materialised. Instead, Thirlwell says the worst-case scenarios “just didn’t happen”.
“The world economy turned out to be surprisingly resilient and then those same forecasters found themselves spending the second half of this year revising their forecasts back up again.”
Highlighting key data from the IMF, he says while global growth ran at 3.3 per cent in 2024, the forecast for this year is now little changed at 3.2 per cent. “Despite all those shocks, we’re almost back to where we started.”
1. The trade aftershock that has yet to hit
For company directors, the key question is, what explains that resilience and will it persist?
“One thesis is that it’s all temporary,” explains Thirlwell. “There was a whole bunch of frontloading of consumption and production ahead of the tariffs coming in, there was a lot of quite successful trade diversion, trade rerouting… A lot of the tariffs have been swallowed by US firms. Then there is this massive, AI-led investment boom, which has provided a direct boost to growth.”
As we head into 2026, the concern is that the lagging effects of trade disruption and uncertainty could start to come due. An alternative view, however, is more optimistic.
“Perhaps we all massively overestimated the extent of the disruption and underestimated global resilience, in which case, all of the fears around the implications were a bit overdone,” he says.
Which scenario plays out will define global conditions for boards, but certainty remains elusive.
“Nothing is set in stone,” says Thirlwell. “It’s a particularly volatile environment… We’re going to have some more big shocks and the question is, will we remain as resilient as we were?”
Ultimately, he says, that will depend on policy, markets and the choices boards make.
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2. AI-driven market froth
The second major risk is the possibility that global financial markets are riding an AI-fuelled wave that may not be sustainable.
“Question number one is, is it a bubble? It’s always easy to identify bubbles after they have popped, but it’s a bit harder to tell beforehand. Certainly, the current moment has lots of bubble-like characteristics. So, then the second question is, what kind of bubble is this? Is it a massive bubble… a massive disruption?”
He is blunt about the most dangerous question directors keep asking — when will the correction come? “If I could call the timing of that, I’d be a lot wealthier,” he says, adding it’s plausible directors could get their answer next year.
Market behaviour is also complicating risk assessments. While traditional risk indicators are elevated, equity markets remain unfazed and have remained so for much of 2025.
“Really high uncertainty indexes appear to be saying that nobody has a clue where we’re going,” says Thirlwell. “But the disconnect there is that despite that uncertainty, markets seem to have just gone, ‘yeah, whatever’.”
Alternatively, if the AI boom holds, it spells good news not only for the US economy, but for the global economy as well, with most investors — including Australian institutions — heavily exposed to that market.
An AI boom also carries critical implications for productivity, with directors watching closely for technology-driven gains.
3. Policy and geopolitical uncertainty
The third defining risk for boards in 2026 is the combination of global geopolitics and domestic policy drift.
On geopolitics, Thirlwell says directors are dealing with a set of “known unknowns” — factors that are clearly significant, but fundamentally unpredictable.
US-China tensions, rare earth supply, regional conflicts and diplomatic summits all fall into that category. “We know the ongoing geopolitical contest between Washington and Beijing is going to be important, but we don’t know how it will play out.”
Domestically, monetary policy is one key swing factor. “There are two themes, running in parallel. One is just how persistent inflation is proving… The other half of the equation is the labour market.”
For now, the chances of a further rate cut seem to be falling fast, he says, with the first reading from Australia’s new monthly CPI proving uncomfortably high. But in a data-dependent world, he cautions, forecasts can shift rapidly.
Regulation will remain another key pressure point in 2026, adds Thirlwell, as will the closely linked debate over reviving productivity.
“If you want to get productivity up and running, then you need the regulatory state to be less of a burden and more of a facilitator,” he says. “That is critical.”
The government’s energy and housing commitments aren’t all likely to be met in 2026, he says, but “progress needs to happen next year and that means the government getting out of its own way”.
And while Thirlwell acknowledgesThirlwell acknowledges the cliché, the message stands — “Keep calm and carry on… that’s what you have to do if you’re in a boardroom.”
Ultimately, Thirlwell believes 2026 will not be a year of entirely new shocks. Instead, it will be a year of follow-through, testing the resilience of economies, markets and businesses against the unfinished business of 2025. But if recent years have taught us anything, he adds, it’s to expect the unexpected.
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