Greatest global threat for next two years is cost-of-living crisis, says World Economic Forum survey

01/12/2023

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The logo of the World Economy Forum is displayed at a window of the venue prior to the opening of the event in Davos last year — Foto: Markus Schreiber/AP

The World Economic Forum launches every year a Global Risks Report ahead of the Davos meeting, which this year will take place next week in the Swiss Alps.

This time, the greatest planetary threat pointed out for the next two years is the cost-of-living crisis. In turn, climate and environmental risks are the central focus of global risk perception in the next decade.

The forum also summarizes the top five risks identified separately in different countries. The survey was conducted last year, between September 7th and October 5th, therefore well before the action of the extremist followers of former President Jair Bolsonaro in the Three Powers Square in Brasília.

Thus, in the survey with international executives, the threats to Brazil are rapid and/or persistent inflation; what they coyly call “proliferation of illicit economic activity,” as well as geopolitical confrontation, severe commodity price shock, and job/subsistence crisis.

It is clear that extremism by Mr. Bolsonaro’s supporters now poses questions about political stability in the country. This will lead Economy Minister Fernando Haddad and Environment Minister Marina Silva to talk a lot about the political situation alongside their respective agendas next week.

Globally, inflation management remains a strong concern, as the Davos survey shows.

“Rapid and/or persistent inflation” appears as the biggest threat in several G20 countries, including Brazil, South Korea, and Mexico. The rate has passed 80% in Argentina and Turkey, and in Zimbabwe, Venezuela, Lebanon, Syria, and Sudan it reaches triple-digit levels.

In most of the world, the fiasco to stabilize the price trajectory is evident. The strong concern continues over how to control inflation and protect the population from the cost-of-living crisis, without triggering a deep or prolonged recession that worsens the situation.

The risks involve pressures on food and energy supplies, which may persist for longer. The debt crisis and lasting economic slowdown lengthen the list of top 10 threats for the next two years.

Geopolitical conflicts, erosion of social cohesion, and polarization of society are persistent risks, now compounded by widespread cybercrime, cyber insecurity, and large-scale involuntary migration.

This situation affects efforts to combat other long-term threats involving climate change and biodiversity.

As Carolina Klint, with Marsh McLennan company, summarizes, 2023 is expected to be marked by risks related to food, energy, raw materials, and cybersecurity, causing further disruption in supply chains, and impacting investment decisions.

And attention is turning even more now to the unfolding situation in Latin America’s largest economy.

*By Assis Moreira — Geneva

Source: Valor International

https://valorinternational.globo.com/