The cost-of-living crisis poses the biggest threat to the global economy, according to the World Economic Forum (WEF).
Its Global Risks Report 2023, published ahead of this week’s annual WEF meeting in Davos, predicts that the energy and food supply crunches, which are likely to persist for the next two years, will drive major rises in the cost of living and debt servicing. These crises are in danger of undermining efforts to tackle longer-term risks such as climate change, biodiversity and investment in human capital, it warns.
The research, based on the views of around 1,200 global risk experts, policymakers and industry leaders, argues that “the window for action on the most serious long-term threats is closing rapidly and concerted, collective action is needed before risks reach a tipping point”.
It states that Covid and the Ukraine war have brought energy, inflation, food and security crises back to the fore, leading to follow-on risks of recession, growing debt distress, a deepening cost-of-living crisis, polarised societies beset by disinformation and misinformation, a hiatus on rapid climate action, and geo-economic warfare.
Unless the world starts to co-operate more effectively on climate mitigation and climate adaptation, this will lead to continued global warming and ecological breakdown in the next 10 years, the report warns. Crises-driven leadership and geopolitical rivalries risk “creating societal distress at an unprecedented level, as investments in health, education and economic development disappear, further eroding social cohesion”.
Image credit | iStock