Inflation, War, Social Unrest Threaten Economic Advancement: WEF

The return to a “new normal” after the COVID-19 pandemic was quickly disrupted by Russia’s invasion of Ukraine, which brought a severe crisis in food and energy that has slowed down decades of progress, reports the World Economic Forum (WEF) on its Global Risks Report 2023. The world will also face a set of “older” risks, including inflation, cost-of-living crises, trade wars, capital outflows from emerging markets, widespread social unrest, geopolitical confrontations and the specter of nuclear warfare. 

The report points out that current business leaders and public-policy makers lack experience in dealing with these threats. New global risks include unsustainable levels of debt, a new era of low growth, low global investment, de-globalization, a decline in human development, rapid and unconstrained development of civilian and military technologies and the growing pressure of climate change amid the transition to a 1.5°C world.

“Together, these are converging to shape a unique, uncertain and turbulent decade to come,” reported the WEF via its Global Risks Report 2023.

The report ranked a pool of 10 major risks for the global economy for the next two years by impact severity and deemed that the cost-of-living crisis was the most serious threat for the determined period. Natural disasters and extreme weather events are the second most notorious risks, followed by geoeconomics confrontations, failures to mitigate climate change and the erosion of social cohesion and societal polarization. Large-scale environmental damage incidents, failure of climate change adaptation, widespread cybercrime and cyber insecurity, natural resource crises and a large-scale involuntary migration completed the list. 

The more severe risks in the long term are failure to mitigate climate change, failure of climate-change adaptation, natural disasters, extreme weather events, biodiversity loss, ecosystem collapse and large-scale involuntary migration. 

Mexico, for example, is also being threatened by quickly rising inflation and sharp cost-of-living increases. “With a central Mexican government seemingly disinterested in fostering business-friendly tax and regulatory policies, nor continuing with responsible fiscal policy, Mexican inflation may begin to trend toward the peso-destroying inflation rates of the 1980s. At that time, after spending most of the decade with inflation more than 50%, inflation peaked in 1988 above 150% annually,” says Jesse Anderson, Chairman and CEO, Guanajuato Silver, as reported by MBN.