The Largest Risks the World Faces Over the Next Two Years
The world is currently undergoing a period of instability, with issues such as the cost-of-living crisis and climate change affecting every human in some way. But what are the biggest risks that we currently face?
The World Economic Forum has released the Global Risks Report 2023, which details the largest risks faced by the world over the next two years. These risks have been voted on by leading experts in academia, business, government, the international community and civil society.
Below, we look into these risks, investigating what makes them a threat and which countries will be most affected.
Cost of living crisis
The cost-of-living crisis was deemed as the biggest risk the world will face over the next two years. The global pandemic and the current war in Ukraine have both had a major impact on the world economy, with inflation rising, economies going through a period of low growth, and public debt skyrocketing.
It’s thought that the most vulnerable people will be hit the hardest by the cost-of-living crisis. Countries in East Africa and the Horn, including Somalia, Ethiopia and Kenya are some of the worst affected by the crisis. Oxfam has said that it’s likely that one person will die of hunger every 36 seconds in these countries.
Lebanon has also been severely affected by rising inflation. The Lebanese pound has lost 95% of its value and the GDP shrunk from $55 billion in 2018 to $20.5 billion in 2021. Poverty rates have massively increased across the country, with around 75% of people in Lebanon currently experiencing poverty.
The World Economic Forum predicts that the economic era that emerges from this cost-of-living crisis could see a larger divergence between the richest and poorest countries across the world, with the first rollback of human development that’s been seen for decades.
Natural disasters and extreme weather events
Natural disasters and extreme weather events were seen as the second-biggest risk faced by the world over the next two years. We have already witnessed major natural disasters around the world. Floods, droughts, heatwaves and earthquakes have already caused destruction and hundreds of deaths just this year.
In July 2023, Afghanistan had flash floods over the course of three days, with at least 31 deaths, 41 missing people, and 74 people injured. Agricultural land was damaged and washed away and there was significant damage to residential homes.
In January this year, Afghanistan experienced and unprecedented cold snap, where temperatures fell to −33 °C and there was up to 30 cm of snow. It’s estimated that 166 people died over this period. In addition, 80,000 livestock died, exacerbating the famine being experienced there.
Canada has seen droughts and wildfires across the country, causing damage and destruction. The wildfires are thought to be caused by lightning, happening more frequently due to climate change. 155,856 people in Canada have had to be evacuated due to fires and 32.82 million acres of land have been affected. Carbon emissions have increased due to the fires, with the annual record already being broken just in the first half of 2023.
Geoeconomic confrontation was seen as the third-largest risk faced by the world over the next two years. This includes sanctions put upon counties, as well as trade wars and investment screening.
Economic policies have increasingly been used offensively, to limit the rise of other countries. In addition to this, sanctions, often put in place as a reaction to a country’s political or military action, have a huge impact on the population.
Since the Taliban took control of Afghanistan, other countries have sought to cut them off from the international financial system. Large amounts of foreign aid have also been lost. This has caused the economy to collapse, and for millions to now be living below the poverty line. It’s estimated that these economic issues have caused a humanitarian crisis that could see more deaths than the 20 years of war previously experienced in the country.
Countries are also looking to become more self-sufficient and reduce dependence on rival powers. This can see international companies excluded from key markets, as well as subsidies and tax credits for local organisations. The World Economic Forum predicts that these policies will result in lower economic growth overall and the end of cheaper and globalized resources as countries become more and more insular.
Failure to mitigate climate change
Failure to mitigate climate change is deemed the fourth-largest risk faced by the world over the next two years. Despite decades of campaigning by climate activists and scientists, it’s thought that the world has been ineffective at properly reducing climate change. As such, the world faces more frequent and more severe natural disasters caused by climate change, as well as a serious lack of natural resources, increased migration and, ultimately, severe and dire consequences for the planet and society.
The World Economic Forum indicates a disparity between what has been scientifically necessary to mitigate climate change and what has been politically expedient. This has meant that there has been less investment into renewable energy sources than has been needed.
In fact, the EU spent 50 billion euros on expanding and creating new fossil-fuel infrastructure. Some countries, such as Germany and the Netherlands, have restarted coal power stations that were due to close. The current international economic and political situation may have been a factor in the reduction in investment in renewable energy. However, failure to address climate change will only see the current effects worsening.
Erosion of social cohesion and social polarization is seen as the fifth-largest risk faced by the world over the next two years. This is defined as “the loss of social capital and the fracturing of communities”. It’s thought that this risk has a knock-on effect on many other risks faced by the world, such as debt and cost-of-living crises and also climate migration.
Many countries have witnessed issues with societal polarization in recent years, particularly on issues such as gender, immigration, race, religion, sexuality, and reproductive rights. These have been a focus for many political elections and referendums. Discontent with society and these issues have led to protests in many countries, including the USA, the UK, China, and Iran.
The increase in societal polarization results in a loss of the political center and a wider gap between the left and right in politics. This, in turn, leads to more of the population becoming alienated and angry, and society more at risk of civil unrest. There can also be an increase in people distrusting the government and political institutions.