The World Economic Forum (WEF) has released its annual Global Risks Report ahead of its Davos summit. In the report, the WEF warns that a looming recession, combined with the cost of living crisis, and mounting debt, are the largest threats facing the global economy right now.
According to the report, which surveys 1,200 government, business and civil society professionals, the world economy will remain hobbled by these factors for the next two years, as nations confront, “energy, inflation, food and security crises.”
Two thirds of those surveyed predict that the global economy will endure multiple shocks, similar to the recent reemergence of the Covid-19 pandemic, and the ongoing military conflict in Ukraine, all of which will hamper growth and produce continued economic hardships. One fifth of those surveyed predicted there would be, “catastrophic outcomes” within one decade.
Carolina Klint, risk management leader for Continental Europe at Marsh, said in an interview with CNBC, “We’re looking at something that feels new, but at the same time eerily familiar,”told CNBC. “So we see a return of some older risks that we felt we had made good progress in terms of solving, but are now very much back on the risk map.”
The report asserted the most imminent risk is the cost of living crisis, which the report notes is, “very difficult to accept” given how it targets the most vulnerable in society.
Klint concluded, “Governments are now really working towards mitigating that impact, at the same time as they’re trying to protect from spiraling inflation and servicing historically high debt loads.”
The report calls for cooperation across the globe, noting that if authorities fail to deal with the crisis appropriately now, they, “risk creating societal distress at an unprecedented level, as investments in health, education and economic development disappear, further eroding social cohesion.”
WEF managing director Saadia Zahidi warned that it is possible the global economy is entering a, “vicious cycle,” and that, “in this already toxic mix of known and rising global risks, a new shock event, from a new military conflict to a new virus, could become unmanageable.”
The report went on to warn that the world could face a “polycrisis,” where multiple problems overlap, exacerbating the economic contraction, and forcing a, “resource rivalry” where countries, instead of working together, enter into a global competition for natural resources, making the crisis even worse.
Photo Of George Soros courtesy of : Flickr: George Soros – World Economic Forum Annual Meeting 2011
