As the world grapples with the aftershocks of the COVID-19 pandemic and geopolitical tensions, a WEF report has shed light on the global risks that will shape the next two years and beyond. The Global Risks Report 2023, released by experts in various fields, presents a sobering outlook, highlighting how the cost of living crisis takes center stage in the short term, while climate action failure poses significant threats over the next decade.
In the immediate future, the cost-of-living crisis has been identified as the most severe global risk, with soaring inflation and monetary policy normalization creating economic challenges. The cost of living crisis has already been a dominant global risk in the first half of 2023 and is predicted to persist for the next two years. Governments and central banks are warned of the possibility of stubborn inflationary pressures, exacerbated by lingering pandemic effects and supply chain disruptions from geopolitical tensions. The risk of stagflation, a combination of stagnating economic growth and surging inflation, looms, potentially impacting vulnerable communities the hardest and leading to societal unrest.
Moreover, the report warns of a new economic era characterized by stagnation, divergence, and distress. The end of the low-interest rate era will have far-reaching ramifications for both developed and developing countries, exacerbating inequalities and potentially leading to political instability. Middle-income households could suffer, triggering discontent and polarization. Governments will face a delicate balancing act between protecting their citizens from the cost-of-living crisis while managing escalating debt burdens.
On the geopolitical front, economic warfare and geoeconomic confrontation are expected to heighten, with countries deploying economic policies offensively and defensively to gain strategic advantages. Geopolitical tensions may escalate into multi-domain conflicts, and the emergence of new technologies poses a cybersecurity concern. Sophisticated cybercrime, attacks on critical infrastructure, and data misuse could threaten the stability of societies worldwide.
However, the gravest risk that looms over the next decade is climate action failure and its interconnected impact on biodiversity loss and ecosystem collapse. Despite growing awareness of the need for climate mitigation and adaptation efforts, progress has been slow and insufficient. The lack of concerted action to achieve net-zero emissions is exposing vulnerable communities to the impacts of climate change, jeopardizing food security, amplifying natural disasters, and threatening overall planetary health.
The report also emphasizes the dangers of concurrent crises and polycrises, where multiple interconnected risks collide, causing greater overall impact. The erosion of geopolitical cooperation may exacerbate environmental, geopolitical, and socioeconomic risks related to the supply and demand for natural resources, potentially leading to humanitarian and ecological crises.
The experts behind the report call for urgent action to shape a more secure future. Enhancing trust in multilateral processes and investing in resilience measures that address multiple risks are crucial steps in preventing and responding to emerging global crises. The interconnectedness of global risks provides an opportunity to implement solutions that have a multiplier effect on overall preparedness.
While the outlook may seem bleak, the report also highlights that there is still a window to avert the worst outcomes. However, collective and decisive action is required to move toward a more positive, inclusive, and stable world. Governments, businesses, and individuals must work together to address these risks and build a more resilient global community capable of weathering the challenges that lie ahead.
