Global Supply Chains Enter Era of Structural Volatility: WEF

Global supply chains have entered an era of structural volatility, forcing companies and governments to re-evaluate how and where they invest and produce, and three in four business leaders are now prioritising resilience as a driver of growth, a new report said on Monday.

The World Economic Forum report, released ahead of its annual meeting 2026 here, said this volatility reflects a fundamental rewiring of global value chains, driven by geopolitics, industrial policy, the energy transition and technological acceleration.

The Global Value Chains Outlook 2026 drew insights from more than 100 consultations with leaders from industry, government and academia, alongside survey data from over 300 senior executives.

It called for defining strategic imperatives for industry and a blueprint for industrial policy -- while a complementary interactive tool helps businesses and governments assess manufacturing risks, strengths and gaps.

The study cited a use case from India on Tamil Nadu's stable and predictable investment climate, saying the state has become one of India's most reliable industrial destinations with political stability, consistent regulation, tailored incentives, strong infrastructure and skilled talent.

"For over 15 years, its predictable policies have attracted long-term global investments. Japanese firms cite ease of operations and quick approvals, while VinFast (a Vietnamese electric vehicle manufacturer) built its 400-acre, 50,000-unit EV facility in just 17 months, far faster than the usual 24-36 months, crediting Tamil Nadu's proactive policies and workforce readiness.

"This stable, investment-friendly environment positions the state as a dependable hub global supply chains," it noted.

The report also highlighted examples from Ireland, China and Qatar, among others, on how targeted national approaches are already shaping manufacturing competitiveness.

"Volatility is no longer a temporary disruption; it is a structural condition leaders must plan for," WEF Managing Director Kiva Allgood said.

"Competitive advantage now comes from foresight, optionality and ecosystem coordination. Companies and countries that build these capabilities together will be best positioned to attract investment, secure supply and sustain growth in an increasingly fragmented global economy," Allgood added.

The scale of the shift is already evident. In 2025 alone, tariff escalations between major economies reshuffled more than USD 400 billion in global trade flows, while disruptions across major shipping routes pushed container shipping costs up 40 per cent year on year, signalling a decisive move away from short-term shocks towards enduring uncertainty.

At the same time, manufacturing output across advanced economies is growing at its weakest pace since 2009, while more than 3,000 new trade and industrial policy measures were introduced globally in 2025 alone -- more than three times the annual level recorded a decade ago.

Together, these forces underscore why supply chain resilience has become a central determinant of national competitiveness and corporate strategy, the WEF said.

"Supply chain disruption in 2026 will be constant and structural.

Geopolitical fragmentation, shifting trade rules and labour shortages are all redefining how value is created and moved," said Per Kristian Hong, Partner, Kearney.