The top 10 crises the world can’t ignore in 2026 | The IRC

The IRC’s 2026 Emergency Watchlist ranks 10 countries most likely to see worsening humanitarian crises, driven by armed conflict, famine, displacement and climate shocks amid shrinking international aid. Key figures and risks include Sudan (19.2m people—40% of the population—in crisis or worse; >150,000 killed since April 2023), Gaza (over 70,000 killed, confirmed famine and ~130,000 children under‑5 acutely malnourished), Lebanon (currency lost >98% value, ~80% of population in poverty), Mali (humanitarian response 18.5% funded by Dec 2025) and Ethiopia (USAID $387m funding cut), signaling heightened sovereign and country risk in affected emerging markets and potential pressure on commodity, energy logistics and humanitarian-related flows.

Analysis

Market structure: Geopolitical collapse across the 10 high-risk countries favors security/defense, precious metals and select energy/mining suppliers while crushing EM sovereign credit, local FX and consumer-facing EM companies. Expect defense names (RTX, LMT) and gold/rare-earth exposures (GLD, GDX, MP Materials) to gain pricing power as risk premia rise; EM sovereign spreads (EMB) can widen 100–300 bps over 3–12 months, pressuring regional banks and local-currency debt.

Risk assessment: Tail risks include wider regional war (Middle East spillover) that could push Brent +$20–40 in 1–3 months, mass migration into neighboring states raising political risk premia, or sanctions that freeze key commodity flows (gold/rare earths). Short-term (days–weeks) shocks will manifest in FX and CDS; medium (months) in commodity and bond markets; long-term (quarters) in structural capital reallocation away from EMs with collapsing institutions.

Trade implications: Tactical plays: (1) 2–3% position in GLD or 3-month GLD call spreads to capture safe-haven upside if gold rallies 5–15% within 1–3 months; (2) 2% long GDX and 1–2% long XLE/XOM for commodity/energy supply shocks over 3–12 months; (3) buy EMB put spreads or long IG-EM CDS protection sized to tolerate a 200 bps spread widening over 3–6 months; (4) pair trade: long RTX (1.5–2%) vs short EEM (1.5–2%) to express defense outperformance vs broad EM risk.

Contrarian angles: Consensus discounts selective EM recoveries — not all EMs will be uniformly punished; countries with strong FX reserves and commodity export surpluses (Indonesia, Brazil) are mispriced after knee-jerk outflows and may be bought on 10–20% drawdowns. Also, fertilizer suppliers (CF, MOS) are under-owned: disruption-driven crop failure risk could force fertilizer price spikes and justify 6–12 month longs. Watch for overbaked sell-offs in high-quality EM sovereigns where spreads >150 bps above historical median present buying windows.

Key Decisions for Investors

• Establish a 2–3% tactical long in GLD via 3-month call spreads (target 5–15% gold move) and set stop-loss if gold falls 3% from entry; increase to 4–6% within 6 months if EM sovereign spreads widen >100 bps.
• Allocate 2% to GDX (or equivalent gold-miner basket) and 1–2% to XLE/XOM to hedge commodity supply shocks; take profits if miners rally >25% or oil >$20 above current levels.
• Initiate EMB put spread sized to loss budget of 0.5–1% of portfolio to protect against a 150–250 bps EM sovereign spread widening over 3–6 months; roll or exit if spreads compress below +75 bps from current level.
• Run a pair trade: long RTX (1.5–2%) vs short EEM (1.5–2%) to capture defense upside and EM downside; rebalance after 6–8 weeks or if RTX underperforms by >10%.
• Buy 1–2% exposure to CF or MOS (cash or 9–12 month calls) to play fertilizer tightness; add if La Niña flood/drought signals strengthen within next 60 days or crop forecasts worsen 10%+ versus baseline.