The chronic gap between the incomes of the richest and poorest citizens is seen as the risk that is most likely to cause serious damage globally in the coming decade, according to over 700 experts contributing to the World Economic Forum’s Global Risks 2014 report.
The World Economic Forum is an independent international organisation that seeks to engage business, political, academic and other leaders of society in shaping global, regional and industry agendas. It convenes an annual gathering in the Swiss ski resort of Davos.
- The risks considered to be 'high impact and high likelihood' are mostly economic and environmental in nature: in particular severe income disparity, and structurally high unemployment and fiscal crises in key economies; along with greater incidence of extreme weather events, and failure of climate change mitigation and adaptation.
- The risks perceived to be most interconnected with other risks are macroeconomic – fiscal crises, and structural unemployment and under-employment – with strong links between this macroeconomic 'risk nexus' and social issues, such as rising income inequality and political and social instability.
- Income disparity is among the most worrying of issues. The report raises concerns about the 'Great Recession' and its squeezing effect on the middle classes in developed economies, at the same time as globalisation has brought about a polarisation of incomes in emerging and developing economies. The latter is true despite the obvious progress in countries such as Brazil and lower levels of poverty in several developing countries in Asia and Africa.
Jennifer Blanke, Chief Economist at the World Economic Forum, said: 'Each risk considered in this report holds the potential for failure on a global scale; however, it is their interconnected nature that makes their negative implications so pronounced as together they can have an augmented effect. It is vitally important that stakeholders work together to address and adapt to the presence of global risks in our world today'.
Source: Global Risks 2014, World Economic Forum
Links: Report | WEF press release | Guardian report