Food, fuel and cost crises to hit world hard in 2023: report

LAHORE: The World Economic Forum (WEF), a 52-year-old international non-governmental and lobbying organisation based in Geneva, has forecast that food, fuel, and cost crises are exacerbating societal vulnerabilities as declining investments in human development are eroding future resilience.

The WEF predicted in the 18th Edition of its Global Risks Report 2023 that the cost of living will dominate global risks in the next two years, while climate action failure will continue to haunt the planet’s residents for the next decade.

High and unaffordable costs of living have been ranked as the most severe global risk over the next two years, peaking in the short term.

The WEF report has highlighted the multiple areas where the world is at a critical inflection point, opining that as the conflict between Russia and Ukraine approaches one year, economies and societies will not easily rebound from continued shocks.

The report preface reads: “It is a call to action, to collectively prepare for the next crisis the world may face and, in doing so, shape a pathway to a more stable, resilient world.”

The Global Risks Report considers this backdrop of simmering geopolitical tensions and the confluence of socioeconomic risks. It identifies the most severe perceived risks to economies and societies over the next two years. The world’s collective focus is being channelled into the “survival” of today’s crises: the cost of living, social and political polarization, food and energy supplies, tepid growth and geopolitical confrontation, among others.

The risk categories considered in this report are economic, environmental, geopolitical, societal and technological.

According to this document, the top risks for 2023 with the greatest potential impact on a global scale include an energy supply crisis, a cost-of-living crisis, rising inflation, a food supply crisis and cyber-attacks on critical infrastructure.

Similarly, weaponisation of economic policy, weakening of human rights, a debt crisis, and failure of non-food supply chains are other major areas of concern for humanity this year, according to the World Economic Forum.

Following are some more projections from this report:

As one economic era ends, the next will bring more risks of stagnation, divergence, and distress.

The recent uptick in military expenditure and proliferation of new technologies among a wider range of actors could drive a global arms race in emerging technologies.

Climate mitigation and adaptation efforts are set up for a risky trade-off while nature collapses.

The report notes: “Nature loss and climate change are intrinsically interlinked—a failure in one sphere will cascade into the other. Without significant policy change or investment, the interplay between climate change impacts, biodiversity loss, food security, and natural resource consumption will accelerate ecosystem collapse, threaten food supplies and livelihoods in climate-vulnerable economies, amplify the impacts of natural disasters, and limit further progress on climate mitigation.”

As volatility in multiple domains grows in parallel, the risk of poly-crisis accelerates.

Geopolitical fragmentation will drive geo-economic warfare and heighten the risk of multi-domain conflicts.

Technology will exacerbate inequalities, while cyber-security risks will remain a constant concern.

The WEF report maintains: “The first years of this decade have heralded a particularly disruptive period in human history.” The return to a “new normal” following the COVID-19 pandemic was quickly disrupted by the outbreak of war in Ukraine, ushering in a fresh series of crises in food and energy and triggering problems that decades of progress had sought to solve. As 2023 begins, the world is facing a set of risks that feel both wholly new and eerily familiar. “We have seen a return of “older” risks — inflation, cost-of-living crises, trade wars, capital outflows from emerging markets, widespread social unrest, geopolitical confrontation, and the spectre of nuclear warfare — which few of this generation’s business leaders and public policymakers have experienced.”

It asserts: “These are being amplified by comparatively new developments in the global risk landscape, including unsustainable levels of debt, a new era of low growth, low global investment, and de-globalization, a decline in human development after decades of progress, rapid and unconstrained development of dual-use (civilian and military) technologies, and the growing pressure of climate change impacts and ambitions in an ever-shrinking window for transition to a 1.5°C world.” Together, these are converging to shape a unique, uncertain, and turbulent decade to come.

The World Economic Forum Global Risks Report 2023 has a further forecast: “Economic pressures will also erode gains made by middle-income households, spurring discontent, political polarisation, and calls for enhanced social protections in countries across the world.

“Governments will continue to face a dangerous balancing act between protecting a broad swath of their citizens from an elongated cost-of-living crisis without embedding inflation — and meeting debt servicing costs as revenues come under pressure from an economic downturn, an increasingly urgent transition to new energy systems, and a less stable geopolitical environment.”