An opinion poll conducted by the World Economic Forum (WEF) and published on 14th January, 2016, ahead of the discussions in Davos, has revealed that the global economy faces a worrying array of risks, from natural disasters-related to climate change to hacking. The Survey has found that a failure to deal with and prepare for climate change would potentially be the most costly risk over the next decade. It may be noted that it was the first time that an environmental concern had topped the list of global risks in the 11 years the WEF had carried the Survey. Climate change was exacerbating more risks than even before in terms of water crisis, food shortages, economic growth and security risks. Leaders were also concerned about the aftermath of the 2008 financial crisis, which saw the collapse of many banks around the world and was the deepest global recession since the World War II. The WEF Survey also found that large-scale involuntary migration - not just in Europe but within regions like the Middle East - was another risk which could have a potential impact on the stability of global economy. With 60 million involuntary migrants in 2015, almost 50 percent more than at the time of the World War II in 1940, the world was also facing the risk of social unrest.
Looking at the Survey, one could easily see that the latest array of risks to the global economy is different from the past. In particular, there is now growing concern than ever before that climate change could pose the greatest risk to mankind not only in physical terms but also in economic terms. As everybody could realise, climate change could lead to water scarcity, flooding, food shortages, extinction of certain species, insecurity and war in certain situations. Also, the impact of climate change could be different in various regions and underdeveloped parts of the world were thought to be more vulnerable. As such, the undeveloped regions which had almost no part in creating this problem would suffer much more than the developed countries. Fortunately, the problem is being highlighted at the global stage with greater intensity and nearly 200 countries have now agreed to keep global temperatures from rising another Celsius degree (1.8 Fahrenheit) between now and 2100 in the Paris Agreement. Nobody knows the precise impact of this Agreement on the level of climate change but one could only wish that the Agreement should have been more ambitious and binding. As far as risk of involuntary migration is concerned, there is already a refugee crisis that has gathered pace last year. This has led to calls for changes in the freedom of movement of labour even within the 28-country European Union. If the problem persists, it could hurt trade, industry and social cohesion. The effects of the 2008 financial crisis were not fully over as yet that another crisis seems to be brewing. Speaking at a meeting of G20 representatives in Beijing, China's State Councillor, Yang Jiechi, has warned that a new global financial crisis was possible as markets suffer a painful rout, partly over fears of turmoil in the world's second largest economy. Overall, however, it seems that non-economic factors would play a bigger role in determining the economic destiny of the world. Hopefully, economic managers of Pakistan would be able to analyse the situation carefully and thoroughly and devise a proper framework to face the future with wisdom and fortitude.
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