Davos Forum reviews world economic challenges in the midst of widening social gaps and failure of international institutions

The endemic gap between rich and poor continues to widen thus constituting a serious global risk in 2014 notwithstanding the slow start of economic recovery in a number of countries.  Indeed, widening income gap, and its accompanying social unrest, is likely to have a major impact on the global economy in the coming decade.  This was the main conclusion of the annual risk assessment report prepared by the World Economic Forum in preparation for its 44th annual conference planned to be held in Davos between 22 and 25 January, and entitled “The Reshaping of the World: Consequences for Society, Politics and Business”.
The sixty-page report reviews some 31 risks of a global nature which can potentially have a negative impact on the global economy in the next decade.  The report classifies these risks into five main categories namely economic, environmental, geopolitical, social and technological.  The risks are assessed on the basis of their potential occurrence and impact.  According to experts, the most likely to occur risks are the following: growing income gap, severe weather conditions, imbalances in employment, climate change and cyber attacks.
The report includes a review of three specific risk cases namely the increasing risk of cyber attacks, more complications in the geopolitical factors, growing youth unemployment and limited job opportunities.  The report also highlights the double-risk challenges confronting the adult population in productive age and linked to rising unemployment and prohibitive costs of education and reviews their expected impact on political and social stability and economic development.  The report also provides insights as to how these risks can be mitigated especially since more than 50% of the global youth population is seeking employment whereas informal employment remains dominant in developing countries which include 90% of the world youth.
Within this same vein, Swiss Re's Group Chief Risk Officer David Cole, noted that the younger generation in advanced countries continues to struggle within a contest of a shrinking job market and a mismatch between available skills and market needs.  Cole called for including the youth in discussions aimed at finding solutions in harmony with their circumstances, and the creation of appropriate educational systems and effective job markets.
The report zooms in on four key risks which are likely to affect global stability within the next decade namely a) mistrust of and uncertainty in emerging markets, b) trade and political divergences amongst countries, c) increase in the number of low intensity conflicts, and d) slow progress in addressing global challenges given the continuous blockage within global governance institutions which will undoubtedly reflect in further failure to adequately address environmental and development challenges.
Source: The Daily Star 17 January, Info Mubasher website 18 January 2014