Business / Business News
Societal and environmental concerns top the list of global risks according to the World Economic Forum (WEF) survey of global risks.
84% of respondents saying they were worried or concerned about the outlook of the world, while economic challenges due to the pandemic will also persist.
The WEF released the 17th Global Risk Report 2022, that shows the top risks facing humanity, this week.
The report is based on the WEF’s Global Risks Perception Survey, conducted to gather insights from nearly 1 000 global experts and leaders.
Vaccine inequality is demonstrated by the fact that only 6% of the population had been vaccinated in the 52 poorest countries where 20% of the people in the world live.
The WEF estimates that developing economies, excluding China, will fall 5.5% below their pre-pandemic expected GDP growth by 2024, while advanced economies will surpass it by 0.9%, widening the global income gap.
The resulting global divergence will create tensions inside and across borders and increase the risk of worsening the pandemic’s impacts and complicating the coordination needed to tackle common challenges, such as strengthening climate action, enhancing digital safety, restoring livelihoods and societal cohesion and managing competition in space.
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The economic outlook remains weak, with the global economy expected to be 2.3% smaller by 2024 than it would have been without the pandemic, according to the report.
Emerging risks include rising commodity prices, inflation and debt, while another spike in Covid-19 cases at the end of 2021 again stifled countries’ sustained recovery.
The pandemic’s economic fallout is creating labour market imbalances, protectionism, and is widening the digital, education and skills gaps, splitting the world into conflicting paths.
Many countries will be held back by low vaccination rates, continued stress on health systems, digital divides and stagnant job markets.
These conflicting paths will make it more complicated to work together internationally to tackle the worsening impacts of climate change, manage migration flows and combat dangerous cyber-risks.
Short-term domestic pressures will also make it harder for governments to focus on long-term priorities. and will limit the political capital allocated to global concerns.
With the erosion of social cohesion identified as a top short-term threat in 31 countries, including South Africa, Argentina, France, Germany and Mexico from the G20, the WEF expects that already challenging differences will become even bigger, with another 51 million people projected to live in extreme poverty.
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When respondents were asked to name the risks that became worse since the beginning of the pandemic, they identified the erosion of social cohesion, livelihood crises and mental health deterioration.
Only 16% felt positive and optimistic about the outlook for the world, and only 11% believed the global recovery will accelerate.
Instead, most respondents anticipate that the next three years will be characterised by consistent volatility and multiple surprises, or fractured trajectories that will separate relative winners and losers.
They also categorise societal and environmental risks as the most concerning over the next five years, but for the next ten years, the health of the planet dominates their concerns, with environmental risks perceived to be the five most critical long-term threats to the world, as well as the most potentially damaging to people and planet.
Climate action failure, extreme weather and biodiversity loss were the top three of most severe risks, with debt crises and geo-economic confrontations among the most severe risks over the next ten years.
Technological risks, such as digital inequality and cybersecurity failure, were also identified as short- and medium-term, but not long-term.
When asked about international risk mitigation efforts, respondents pointed out that artificial intelligence, space exploitation, cross-border cyberattacks and misinformation, and migration and refugees are problem areas where efforts have not started or are in early development.
However, the majority believes that risk mitigation efforts for trade facilitation, international crime and weapons of mass destruction were already established or effective.
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The report also points out that a disorderly climate transition will exacerbate inequalities, as respondents said that climate action failure is the primary long-term threat to the world, with the most potential risk over the next decade, as already demonstrated by extreme temperatures.
According to the report, countries still relying on carbon-intensive sectors risk losing competitive advantage.
However, shifting away from carbon-intense industries that currently employ millions of workers, will trigger economic volatility, deepen unemployment and increase societal and geopolitical tensions.
The report also warns that adopting hasty environmental policies will have unintended consequences for nature, while the lack of public support for land use transitions or new pricing schemes will create political complications that further slow action.
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Insecurity due to economic hardship, worsening effects of climate change and political instability are already forcing millions to leave their homes.
According to the report, involuntary migration is a top long-term concern, with 60% viewing migration and refugees as an area where international mitigation efforts have not yet made a noticeable difference.
More than 34 million people were displaced globally in 2020 due to conflict alone, while the lingering effects of the pandemic, increased economic protectionism and new labour market dynamics are making it more difficult for migrants seeking opportunity or refuge.
According to the report, higher barriers to migration risk precluding a potential pathway to restoring livelihoods, maintaining political stability and closing income and labour gaps.