The cost-of-living crisis will be the biggest global risk over the next two years, according to a World Economic Forum review on Wednesday ahead of next week’s Davos meeting.
Global inflation remains at sky-high levels after energy and food prices soared last year following Russia’s biggest oil and gas producer’s invasion of Ukraine’s agricultural power plant.
Supply restrictions caused by the Covid pandemic have also contributed to rising consumer prices over the past decades.
“Conflict and geo-economic tensions have given rise to a series of deeply interconnected global risks,” the study said ahead of the WEF’s annual meeting of global elites in the Swiss Alpine village of Davos.
“These include disruptions in energy and food supplies that are likely to persist for the next two years, as well as a sharp rise in the cost of living and debt servicing.”
He added that such “crises risk undermining efforts to address long-term risks, especially those related to climate change, biodiversity and investment in human capital.”
Co-authored with consultants Marsh McLennan and Zurich Insurance Group, the survey took into account the opinions of over 1,200 global risk experts, policy makers and industry leaders.
The report describes the cost-of-living crisis as the “biggest short-term risk” by 2025, followed by natural disasters, extreme weather events and “geo-economic standoff”.
“The short-term risk landscape is dominated by energy, food, debt and natural disasters,” said Saadia Zahidi, managing director of the World Economic Forum (WEF).
“Those who are already the most vulnerable suffer, and in the face of multiple crises, the number of those considered vulnerable is rapidly increasing in both rich and poor countries.”
The WEF study urged “leaders to act collectively and decisively, striking a balance between short-term and long-term views.”
And he concluded that there was a need for cooperation to strengthen “financial stability, technology management, economic development, and investment in research, science, education, and health care.”
Carolina Klint, head of risk management at Marsh, said this year will be marked by “heightened risks” related to food, energy, raw materials and cybersecurity, further disrupting global supply chains and influencing investment decisions.
“At a time when countries and organizations must step up efforts to build resilience, economic barriers will limit their ability to do so.”
Many analysts warn that the global economy will face a recession in 2023 as inflation remains high.
© Agence France-Presse