Climate change is still the biggest risk to global economy: WEF

Climate change is still the biggest risk to the global economy, although infectious diseases will have the biggest impact, according to World Economic Forum (WEF) research. 

In the WEF’s Global Risks Report 2021, the organisation detailed the urgency of creating sustainable economies to address climate change, but also highlighted rising inequality, including digital inequality, and the impact on young people.

In a press conference to launch the report, prior to the forum’s Davos Agenda event next week, Saadia Zahidi, managing director at the World Economic Forum, said: “It is absolutely clear that if you look at the next 10 years, the biggest risk the world faces is still climate change.

“There is no vaccine for this, there is only the actions that we can take today to try to build more sustainable economies.”

WEF research showed that the climate crisis is considered the global risk most likely to have an effect, while infectious diseases are considered the top global risk by size of impact.

Zahidi particularly highlighted the impact of global events on young people, calling them ‘pandemials’: “This doubly disrupted generation that saw both the financial crisis and now the pandemic induced recession.”

Jobs

The digital transformation, accelerated by the COVID-19 pandemic, will create 100 million jobs by 2025, but also has the potential to displace 85 million, according to WEF.

Globally, 60 percent of adults currently lack basic digital skills in order to allow them to access educational or employment opportunities in the digital sphere, according to the WEF, creating a risk of increased inequality.

The WEF report also showed that Gulf states have the highest internet usage by percentage of population in the world. In Bahrain, Qatar, Kuwait and the UAE, above 99 percent are users of the internet and in Saudi Arabia, 95.7 percent are users of the internet. Only Denmark, Norway and South Korea are seeing higher instances of internet usage than Saudi Arabia.   

Guillame Barthe-Dejean, chairman, director’s office, of South Korean conglomerate SK Holdings, said the benefits for countries already embracing digital technology could be seen in their handling of the pandemic: “A learning point from the pandemic is that societies that digitised early, tended to perform better.

“Digital technologies allowed for a smarter and a more centralised response to the pandemic, track and trace applications, better communications of directions from governments, a greater continuity in public services, including schools, and the minimised labour disruptions during lockdowns.”

However, Barthe-Dejean also highlighted the risk that rising global debt, as government’s create economic stimuli to mitigate the effects of the pandemic, may mean the global economy is ‘sleepwalking into the next sovereign debt crisis’.

“Imagine that a country’s debt to GDP ratio is now set to rise to 60 to 70 percent in the medium term. This means that these countries will soon be on the hook for billions of dollars in added loan repayments,” he said. 

“This could become a real concern if declining output continues to damage the tax base, if the dollar starts to appreciate, or if there’s an external demand shock in China for instance.”

Carolina Klint, risk management leader, continental Europe, Marsh, highlighted the need for global cooperation.

“The pandemic has accelerated trends that have been coming for a long time, and it’s clear that improved collaboration and coordination is the only way to improve our collective resilience and capacity to respond to these shocks,” she said. 

“We see many businesses grappling with how to survive and build resilience, not only in relation to the ongoing pandemic impact, but an increased number of cyberattacks, catastrophic climate events, and social unrest.”

 

Source: https://www.zawya.com/mena/en/economy/story/Climate_change_is_still_the_biggest_risk_to_global_economy_WEF-ZAWYA20210120035309/

 

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