When the Organisation for Economic Co-operation and Development (OECD; a club of mostly rich countries) published its latest Interim Economic Outlook last week, global growth of 2.9 per cent in 2026 came in below the pre-conflict trajectory, with G20 inflation heading back up to four per cent after two years of progress in bringing it down. The culprit, as it so often is, is the Middle East. The conflict there has sent energy prices surging, and the consequences are reverberating through supply chains and finance ministries in equal measure.
Nevertheless, the current energy shock is, in many ways, a distraction. It is the most visible symptom of a much older problem, namely that most countries have built their economies for a world that no longer exists. The post-Cold War order promised that comparative advantage was enough (that you could rely on others to supply what you did not produce, confident that markets would route around any disruption). That assumption has had a bad few years.
The OECD’s prescription (targeted fiscal support, central bank vigilance, and a medium-term push to reduce fossil fuel dependency) is sensible as far as it goes. But it does not go very far. Energy is one exposure among several, and arguably not the hardest to fix. The countries that will weather the next decade of geopolitical turbulence are those that understand what they are actually vulnerable to.
Critical dependencies
Energy gets the attention because oil price shocks are fast and measurable (almost immediately by consumers at the petrol pumps). Critical minerals are slower and subtler, and the reckoning tends to arrive without much notice. By 2035, China is projected to supply more than 60 per cent of refined lithium and cobalt, around 80 per cent of battery-grade graphite and rare earth elements, and approximately 70 per cent of battery-grade manganese. These are the physical inputs on which the energy transition depends, and a country that decarbonises by swapping oil dependency for rare earth dependency has not really solved its geopolitical exposure in any meaningful way.
The EU recognised this in its 2024 Critical Raw Materials Act, which targets 60 strategic projects across lithium, graphite, cobalt, nickel and rare earths. Progress has been modest. Financing falls well short of what the scale of diversification requires, and without credible demand signals (price floors, long-term procurement commitments), private capital is reluctant to follow. The US has moved faster, hosting 54 countries at its Critical Minerals Ministerial in February and creating the Forum on Resource Geostrategic Engagement (FORGE) as successor to the Minerals Security Partnership. Whether these frameworks translate into actual mine production, rather than ribbons and memorandums, remains to be seen.
Food is the third leg of the stool, and the one that receives least policy attention outside crisis moments. The Canadian Prime Minister Mark Carney put it plainly at Davos in January, saying: “A country that cannot feed itself, fuel itself or defend itself has few options.” Food systems are now being reorganised around national protectionism and geopolitical alignment rather than anything resembling a shared global vision. The World Food Programme’s 2026 Global Outlook projects 318 million people facing crisis-level hunger as aid budgets contract across OECD donors. Higher fertiliser prices (a direct consequence of elevated energy costs) will compound the picture. Countries that invested in domestic agricultural productivity during leaner years are considerably better placed than those that did not.
The fiscal constraint
Building resilience costs money at precisely the moment when fiscal space is tightest. Global debt stands at 235 per cent of GDP, and governments are already issuing record levels of sovereign bonds to fund defence and industrial policy. Rising long-term yields (another consequence of the current energy shock) make the arithmetic worse. Expensive resilience programmes financed with borrowed money create new fragility of a different kind.
This is where the OECD’s least politically palatable recommendation is also its most cost-effective. Lowering trade barriers would, as its outlook notes, boost output and reduce inflationary pressure simultaneously. It requires no government spending and no new industrial policy. It is, in principle, available immediately. The trouble is that it runs headlong into the dominant political direction of travel in most major economies, where protectionism has been rebranded as economic security and tariffs are more likely to go up than down.
A cheaper version of resilience is available to most countries, one that does not require choosing between diversified supply chains and solvent public finances. It involves, at minimum, reducing rather than deepening reliance on single-source dependencies across energy, minerals and food; building modest fiscal buffers in good years rather than spending them; and resisting the temptation to treat reshoring as synonymous with resilience. Research on Japanese multinationals across East and Southeast Asia finds little evidence that reshoring actually helps. Firms that diversify supply chains across multiple nodes do better than those that retrench. The lesson generalises.
None of this is cheap, easy or quick to implement. What it does not require is crashing the economy in pursuit of an autarky that no middle-income country can afford. The OECD’s prescription is, at best, incomplete. Genuine resilience requires governments to do things that are expensive, slow and structurally unpopular, and to do them now, before the next shock arrives, rather than in response to it. History suggests most will wait.
Photo: Dreamstime.
