Growing income inequality is the biggest threat to the world’s economy, says the latest edition of the World Economic Forum’s Global Risks report.
The report, which surveyed more than 1,000 industry, government and academic experts, also throws up a litany of other risks that could derail the slow, lumbering recovery from the financial crisis of recent years, including a “major systemic financial failure,” food and water shortages, cataclysmic climate events, and “diffusion of weapons of mass destruction.”
With reports like this, you could be forgiven for thinking the world’s economy is turning into a Roland Emmerich disaster movie.
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The survey found a close correlation between respondents who worried about growing income inequality and those who worried about a backlash against globalization, suggesting experts may be worried that the increasing concentration of wealth in the hands of capital owners could turn the public against free trade and other policies designed to liberalize the international economy.
The survey ranked threats by likelihood and by impact. Income inequality topped the likelihood ranking, suggesting experts see it as the likeliest threat to have a negative impact on the economy. A “major systemic financial failure” topped the impact risk, indicating that, while it’s not as likely as inequality to cause problems, its impact would be greater if it were to happen.
Besides the income gap, the other risks topping the likelihood rankings included chronic fiscal imbalances, rising greenhouse gas emissions, water supply crises and mismanagement of an aging population.
Besides a financial system collapse, the biggest risks in terms of impact were water supply crises, chronic fiscal imbalances, food shortage crises and diffusion of weapons of mass destruction.
The World Economic Forum issues its risk report ahead of its annual meeting in Davos, Switzerland, which this year will take place from January 25 to January 27.