A report pinpoints a new malaise that is acute in historically confident industrialised countries, writes Larry Elliott
THE THREAT of fresh economic turmoil and social upheaval may put at risk the gains produced by globalisation, the World Economic Forum said yesterday.
In its annual assessment of the outlook for the global economy, the forum set the scene for its meeting in Davos later this month by warning that the “seeds of dystopia” were being sown.
The growing number of young people with little chance of finding a job, an increasing number of elderly people dependent on states deeply in debt and the expanding gap between rich and poor were all fuelling resentment worldwide, the forum said in its Global Risks 2012report.
“For the first time in generations, many people no longer believe that their children will grow up to enjoy a higher standard of living than theirs,” said Lee Howell, the forum’s managing director responsible for the report. “This new malaise is particularly acute in the industrialised countries that historically have been a source of great confidence and bold ideas.”
The survey of 469 global experts identified chronic problems with government finances and severe income inequality as the most prevalent risks over the next decade.
“These risks in tandem threaten global growth as they are drivers of nationalism, populism and protectionism at a time when the world remains vulnerable to systemic financial shocks, as well as possible food and water crises,” the report said.
The study said early hopes that closer global integration would inevitably lead to higher living standards for all were at risk of being dashed by trends that left large numbers of people fearful about the future.
“Individuals are increasingly being asked to bear risks previously assumed by governments and companies to obtain a secure retirement and access to quality healthcare. This report is a wake-up call to both the public and private sectors to come up with constructive ways to realign the expectations of an increasingly anxious global community,” said John Drzik, chief executive of management consultants Oliver Wyman.
The study said the policies and institutions of the 20th century no longer offered protection in a more complex and integrated global economy.
It also warned there was a “dark side of connectivity”, with societies vulnerable to “malicious” and “devastating” cyber attacks.
“The Arab spring demonstrated the power of interconnected communications services to drive personal freedom, yet the same technology facilitated riots in London. Governments, societies and businesses need to better understand the interconnectivity of risk in today’s technologies if we are truly to reap the benefits they offer,” said Steve Wilson, chief risk officer for general insurance at Zurich. – (Guardian service)
