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World leaders pessimistic on economic recovery
Climate change, Covid, cyber security concerns; Asia focus on stagnation, asset bubbles
Tom King 12 Jan 2022

Only one in six international government, business and academic leaders are optimistic about the world outlook for economic recovery, with climate change and the continuing Covid-19 pandemic, topping their list of concerns threatening recovery, according to a recent report.

Other major related concerns involve increased cyber security risk, greater barriers to international mobility, and a number of conflicts that will result in a divided economy, notes the Global Risks Report 2020 published by the World Economic Forum (WEF). The report adds that both rapidly and slowly recovering countries will need to equally navigate economic and societal inequalities to successfully reinstate social unity and lift employment.

As well, the disparity between rich and poor countries in gaining access to vaccines will result in economies recovering at different speeds, which has the potential, the report states, to exacerbate social divisions and intensify geopolitical tensions.

Climate risk

For many countries, however, climate change remains the biggest long-standing concern, with a number of contributors to the report emphasizing failure to act in response to climate change, extreme weather events, and loss of biodiversity as among the highest risks.

Different countries are taking different approaches to this issue, the report points out, with some moving faster to adopt a zero-carbon model than others. Both approaches come with downsides. While moving slowly could radicalize more people who think the government isn't acting urgently, a faster shift away from carbon-intensive industries could spark economic turmoil and throw millions out of work.

Unequal access to low- or zero-carbon innovations is also cited in the report as a factor that could potentially undermine support for governments in some countries and aggravate geopolitical and economic friction and inequalities between countries and regions.

Economies especially reliant on carbon-intensive sectors and that fail to keep up with technological innovation could risk losing their competitive advantage and leverage in trade agreements, leading to civil unrest, regime change, and massive economic and societal disruption.

Cyber threats

As a result of the global pandemic, millions of people have been forced to work or study from home: a move that the WEF report claims has radically increased security risks.

Cyber attacks are becoming more aggressive and widespread, as criminals use tougher tactics to go after more vulnerable targets, the report highlights. Malware and ransomware attacks have boomed, while the rise of cryptocurrencies makes it easy for online criminals to hide payments they have collected.

With governments, societies and companies increasingly dependent on technology to manage everything from public services to business processes, the threat of cyber crime continues to grow.

The cost of cyber crime is not just financial, according to the WEF, as critical infrastructure, societal cohesion and mental well-being can also be put in jeopardy.

Asian view

Executives in Asia, responding to the WEF’s Executive Opinion Survey, conducted between May and September 2021, demonstrated diverse opinions when listing the top risks posing a critical threat to their economy over the next two years.

For executives in China, extreme weather events and asset bubble bursts in large economies are the top worries, with those in Hong Kong citing asset bubble bursts in large economies, as well, and prolonged economic stagnation.

Executives in Singapore and Japan cite prolonged economic stagnation as their number one threat, with those in the city-state highlighting infectious diseases as their number two concern. Indian respondents name the fracture of interstate relations and debt crises in large economies as their top two risks respectively.

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