Are we facing the end of economic development? Global risk report looking ahead to 2034

Raport o ryzyku globalnym

On January 10 this year. The World Economic Forum (WEF) has released its “Global Risk Report.” It summarizes the risks identified by 1,500 experts from around the world. The documentary features many black scenarios showing the future, related to, among other things. with the climate crisis and the alarming direction of technological progress. Will the cumulative impact of weather extremes, armed conflicts and the reach of artificial intelligence use stop global economic development? What key changes will society face in the next 10 years? The answers to these difficult questions do not inspire optimism.

What threatens the world by 2026.

In the fall of 2023. Representatives from academia, business, governments, international organizations and civil society were asked by the WEF to voice their concerns and forecasts for the future. It turned out that in the next two years 54 percent of the Respondents expect instability and moderate risk of global disasters, while 30 percent. predicts even more turbulent conditions.

The Global Risk Report cites extreme weather events as the main threat to the world through 2026. In second and third place were disinformation generated by artificial intelligence (AI) and social and political polarization. The top ten key risk factors were also identified, among others. cyber dangers, international armed conflicts and forced migrations.

Economic slowdown on the horizon?

Among the pessimistic scenarios for the next two years, the Global Risk Report also points to economic uncertainty. Although the global economy has proved surprisingly resilient to crises, and the recession expected a year earlier has not fully developed, experts have reason to be concerned. These include, first and foremost, elevated inflation in many countries and high interest rates that limit economic development. Trade conflicts between the U.S., the European Union and China also do not inspire optimism.

Although tight monetary policy has helped curb inflation in the United States and the eurozone, the central banks’ goals have not been met. And prices could skyrocket again in the coming months as a result of rising food production costs due to the impact of El Niño and the crisis in the Middle East, which will weigh on energy prices and shipping. Additional inflationary factors may be industrial strategies and trade controls resulting from the green transition assumptions.

The small and medium-sized business sector is particularly vulnerable to high interest rates and the economic downturn. As a result, companies may want to cut costs, reducing employment and increasing unemployment, which sooner or later will translate into a reduction in spending by consumers.

United States and China under the magnifying glass

The world economy depends heavily on how the two giants, the US and China, will fare. Experts, meanwhile, point out that the outlook is unclear and difficult to assess. The Global Risk Report suggests that China’s economic development will slow down as a result of a weakening real estate market and external and local demand. On the other hand, if there is no unexpected crisis, the proverbial plank may be the growth of industrial production in more advanced industries, such as green technologies.

In the United States, the steadily widening budget deficit, which is expected to widen in 2023, appears to be a concern. reached $1.7 trillion. Driven by demand, prices may rise for another two years, and the situation is not improved by general consumer pessimism. In addition, servicing the national debt already consumes almost as much as the entire US defense spending. The results of November’s presidential election are also a factor in increasing uncertainty among investors and analysts.

Global risk report: outlook to 2034.

The experts invited to contribute to the report are decidedly more pessimistic about the long-term outlook. As many as 63 percent. of them predict that the risk of global disasters will be high within the next decade. These concerns particularly relate to environmental and technological risk factors. In a ranking of the top 10 threats to the world by 2034. extreme weather events, critical changes in the Earth’s systems, loss of biodiversity and the collapse of natural ecosystems, and deficits in natural resources come first. Environmental pollution also made the top ten.

This year’s Global Risk Report also places great emphasis on the threat posed by the negative effects of AI-based technologies and general public disinformation. In the long run, technological development, despite its obvious advantages, seems to be one of the more worrisome factors. The effects of experiments, such as in the realm of the brain-computer interface, can be incalculable. Geostrategic changes and demographic divisions are also among the risks we are likely to face in the next 10 years. While Europe and North America will face aging populations, and demographic growth in Asia will not stop slowing, by 2030. 42 percent. The world’s youth will come from Africa.

3°C instead of 1.5°C

The experts behind the Global Risks report are highly skeptical of plans to curb global warming at 1.5°C. More than 70 percent. of them fear that the changes over the next decade will be drastic, including, among others, the following. Sea level rise, release of carbon from melting permafrost, and disturbance of atmospheric and ocean currents.

The black scenario talks about reaching a point of no return, which will fundamentally affect food production, clean water supply and health security. If global warming reaches 2-4°C, projections include. The transformation of the Amazon jungle into savannah, the melting of the Greenland ice sheet, and the severe disruption of the Atlantic Replacement Circulation (AMOC). The Global Risk Report predicts that the effects of these changes will have major socioeconomic implications, including. forced migrations, the spread of infectious diseases (some of which may come from pathogens trapped in glaciers) and economic downturns.

Unfortunately, according to the report’s authors, adaptation to climate change over the next 10 years will be limited, especially in the developing regions most affected by it. Indeed, the development of the relevant infrastructure is time-consuming and expensive. As an example of one of the biggest challenges, the destruction of coral reefs, which absorb 90 percent of the Sea wave energy. Without them, coastal regions will be much more vulnerable to devastating floods.

The end of economic development?

The Global Risk Report also draws a bleak vision of halting economic and social development as a result of the aforementioned climate, technological and geopolitical risks. It is based on the scenario of deepening inequality in the labor market, worsening living conditions and the development of international aggression. Disturbing forecasts predict that despite continued demographic growth, net jobs will decline in the long term, due in part to the development of artificial intelligence.

Postulated measures that could reduce the importance of the aforementioned risk factors include. creating new jobs as part of the green transition, changing the global tax system, and developing international financial mechanisms that could enable investment in poor countries. Global risks should be mitigated, according to the report’s authors, through local strategies, groundbreaking initiatives (especially in R&D) and cross-border coordination.

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