WORLD NEWS January 20, 2014 #38
caucasian business week
13
TOP 10 RISKS FOR THE DECADE AHEAD
W
hat are the top 10 risks that the world will face in the decade to come, and what can be done
about them? The Global Risks 2014 report calls attention to risks that could ripple through entire systems. It aims to improve collaboration among business, governments and civil society by raising awareness of these risks and the way they interact with each other. Based on a survey of the World Economic Forum’s communities, the report maps 31 global risks in five categories (economic, environmental, geopolitical, technological and societal) according to level of concern, likelihood and impact, and interconnections between them. Here is a list of the top 10 global risks of highest concern in 2014, according to the report:
jobs) remains prevalent, especially in emerging and developing markets. 3. WATER CRISES Environmental risks feature prominently on this year’s list. Water crises, for instance, rank as the third highest concern, illustrating a continued and growing awareness of the global water crisis as a result of mismanagement and increased competition for already scarce water resources. 4. SEVERE INCOME DISPARITY Closely associated in terms of societal risk, income disparity is also among the most worrying issues. Concerns have been raised about the squeezing effect the financial crisis had on the middle classes in developed economies, while globalization has brought about a polarization of incomes in emerging and developing economies.
risks on key development and security issues, such as food security and political and social instability, ranked 8th and 10th respectively. 7. GLOBAL GOVERNANCE FAILURE The risk of global governance failure, which lies at the heart of the risk map, was viewed by respondents as one of the risks that is most connected to others. Weak or inadequate global institutions, agreements or networks, combined with competing national and political interests, impede attempts to cooperate on addressing global risks. 8. FOOD CRISES One of the top societal risks in the report, food crises occur when access to appropriate quantities and quality of food and nutrition becomes inadequate or unreliable. Food crises are strongly linked to the risk of climate change and related factors.
1. FISCAL CRISES IN KEY ECONOMIES Fiscal crises feature as the top risk in this year’s Global Risks report. Advanced economies remain in danger, while many emerging markets have seen credit growth in recent years, which could fuel financial crises. A fiscal crisis in any major economy could easily have cascading global impacts.
5. FAILURE OF CLIMATE CHANGE MITIGATION AND ADAPTATION Even as governments and corporations are called upon to speed up greenhouse gas reduction, it is clear that the race is on not only to mitigate climate change but also to adapt. Failure to adapt has the biggest effect on the most vulnerable, especially those in least developed countries.
9. FAILURE OF A MAJOR FINANCIAL MECHANISM/ INSTITUTION Over five years after the collapse of Lehman Brothers, the failure of a major financial mechanism or institution also features among the risks that respondents are most concerned about, as uncertainty about the quality of many banks’ assets remains.
2. STRUCTURALLY HIGH UNEMPLOYMENT/ UNDEREMPLOYMENT Unemployment appears second overall, as many people in both advanced and emerging economies struggle to find jobs. Young people are especially vulnerable – youth unemployment is as high as 50% in some countries and underemployment (with low-quality
6. GREATER INCIDENCE OF EXTREME WEATHER EVENTS (E.G. FLOODS, STORMS, FIRES) Climate change is the key driver of uncertain and changing weather patterns, causing an increased frequency of extreme weather events such as floods and droughts. The Global Risks 2014 report draws attention to the combined implications of these environmental
10. PROFOUND POLITICAL AND SOCIAL INSTABILITY At number 10 is the risk that one or more systemically critical countries will experience significant erosion of trust and mutual obligations between states and citizens. This could lead to state collapse, internal violence, regional or global instability and, potentially, military conflict.
RICH NATIONS TO GET RICHER: WORLD BANK RAISES FORECAST TO 3.2% GROWTH
T
he world economy has reached a turning point five years after the global financial crisis hit. The World Bank expects growth to pick up in 2014 led by the US, Europe, and Japan, and warns of ‘turbulence’ from a slowing China as well as US tapering. Overall, the Washington-based organization sees the world economy expanding 3.2 percent in 2014, in their first report of the year, ‘Global Economic Prospects’, a bi-annual publication published Tuesday. The Bank has bumped up expectations for “highincome countries”, which they say will grow 2.2 percent in 2014, up from 1.5 percent in 2013. “This strengthening of output among high-income countries marks a significant shift from recent years when developing countries alone pulled the global economy forward,” the report said. A growth pick up will be supported by the US, which has shown strong signs of recovery and the
18-member euro currency zone, which dragged down other economies in 2013 on weak consumer demand and imports. Increased import demand should help compensate for more US tapering measures, which could deliver a big blow to emerging markets. Developing markets are vulnerable to risk both from China and US tapering, and commodities will continue to be sensitive to both factors. The US began its tapering program in December which reduced its bond-buying stimulus to $75 billion-per-month, a measure which has helped stabilize financial markets after the 2008-2009 crisis. Further scale-back under the new Fed chair could have a negative spillover effect in emerging markets, but the World Bank believes strong growth will counter and normalize such market shocks. China’s economic growth, which dropped below 8 percent for the first time in 20 years, will continue to slow. GDP is estimate to remain ‘flat’ at
7.7 percent, and then decrease to 7.5 percent in 2015 and 2016. Growth in the world’s secondlargest economy has been lackluster because it is shift into a more sustainable consumption-based, instead of an export-led economy, which led to sensational growth in the 90s. Russia’s economic growth is set to accelerate to 2.5 percent this year from 1.4 percent in 2013, according the government. The World Bank optimistically forecasts growth at 2.2 percent in 2014, 2.7 percent in 2015, and 3.0 percent in 2016. Projections for BRICS countries were cut. Brazil’s growth forecast was cut to 2.4 percent from 4 percent, for Mexico to 3.4 percent from 3.9 percent and for India to 6.2 percent from 6.5 percent. Developing countries will accelerate ‘modestly’ between 2013 and 2016, but “the slower growth is not cause for
concern” the report said. World Bank forecasts are routinely cut and modified throughout the year, and the report will serve as a foundation for further analysis throughout 2014. Rt.com