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Gloomy global forecast for 2022

The biggest disadvantage is obviously the damage to the climate, as extreme weather patterns – which will include drought, floods, extreme temperatures and wild fires – will do immense damage to our economy, says the writer. Picture: Comfreak/Pixabay

The biggest disadvantage is obviously the damage to the climate, as extreme weather patterns – which will include drought, floods, extreme temperatures and wild fires – will do immense damage to our economy, says the writer. Picture: Comfreak/Pixabay

Published Jan 14, 2022

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As we start the new year, it is worth looking at the World Economic Forum’s Global Risks Perception Survey for 2022, but the outlook is not one that bodes well for the developing world – it forecasts consistent volatility.

According to global experts and world leaders, what we can expect in the next three years is a world that more sharply defines the winners and losers as a result of the lingering global pandemic.

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The global income gap between the developed and developing world is growing ever wider.

In the next two years developing economies will have fallen 5.5% below pre-pandemic expected GDP growth, while advanced economies will have surpassed it by 0.9%.

The widening disparities between and within countries are likely to result in heightened international tensions, making it harder to collaborate across borders on pressing global issues.

With the global economy expected to be 2.3% smaller by 2024 than without the pandemic, we will see rising commodity prices, higher inflation, and increasing debt.

The problem for countries like South Africa, is that it will translate into greater social erosion rather than social cohesion, which is also a threat for a number of other G20 countries like Argentina, Mexico, and even France and Germany.

The WEF report predicts that 31 counties will suffer from social erosion as a result of what lies ahead.

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An estimated 51 million people are projected to live in extreme poverty compared to the pre-pandemic trend.

Developing countries like South Africa and India have the added problem of being heavily reliant on carbon intense industries which employ millions of people.

Shifting away from carbon intense industries in an effort to reduce the damage to the planet caused by greenhouse gas emissions will trigger economic volatility, deepen unemployment when we can least afford it, and increase social and geo-political tensions.

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If we maintain our reliance on carbon heavy industries, we risk losing our competitive advantage through a higher cost of carbon, we will lag behind in terms of technological innovation, and have limited leverage in trade agreements.

But the biggest disadvantage is obviously the damage to the climate, as extreme weather patterns – which will include drought, floods, extreme temperatures and wild fires – will do immense damage to our economy.

So we are stuck between a rock and a hard place.

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The WEF Global Risks Report has put climate action failure as the number one long term threat to the world this year.

The report emphasises that greenhouse gas emissions rose faster in 2020 than the average of the last decade, and that is despite the fact that the world was in a hard lockdown due to the Covid-19 pandemic for much of that year.

What we need going forward is to restore trust and foster cooperation between countries.

This is difficult to achieve, particularly when the disparities between north and south have never been so glaring.

In northern countries citizens have typically received their third vaccine dose against Covid-19, while many countries in the south are struggling to administer the first dose of a vaccine to their citizens.

In the poorest 52 countries, which have 70% of the world’s population, only 6% of the population have been vaccinated.

This vaccine inequality and the consequences for national health systems and economies, increases resentment and distrust between north and south.

The two other noteworthy challenges highlighted in the WEF Global Risks Report are the challenges of growing cyber security threats, and also the rise in migration resulting in countries pulling up the drawbridges and erecting barriers for migrants.

The pandemic has forced countries around the world to increase digitisation, especially as people work remotely from home, and are likely to continue this trend in the future, saving on workplace costs. But with digitization of work comes the challenge of cyber security threats.

In 2020, malware and ransomware attacks increased by 358% and 435% respectively.

In 2020 over 35 million people were displaced from their homes as a result of conflict, and due to growing economic protectionism around the world and new labour market dynamics, countries have made it harder for migrants to enter their borders.

With less migrants to do labour intensive jobs, the US has found itself with 11 million unfulfilled jobs, and the EU with a deficit of 400 000 drivers in the trucking industry alone.

Did anyone wonder why it was impossible to find a turkey to buy in South African grocery stores this Christmas?

It is likely our turkeys were exported to the UK at much higher prices, as the UK had been warning since October that due to the shortage of packers and drivers, the country would not have turkeys at Christmas.

Countries are being forced to rethink their xenophobic anti-immigrant policies in order to meet market demands.

For those migrants locked out of developed countries and huddling on their borders, the humanitarian crisis will only worsen, and migration will continue to be used as a political instrument by certain countries, further increasing tensions internationally.

How we navigate this myriad of challenges will determine how we make it through the coming year as a global community.

* Shannon Ebrahim is the Group Foreign Editor

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