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Climate Failure and Social Crisis Top Global Risks 2022

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Climate risks dominate global concerns as the world enters the third year of the pandemic. According to the Global Risks Report 2022, while the top long-term risks relate to climate, the top shorter-term global concerns include societal divides, livelihood crises and mental health deterioration.

Additionally, most experts believe a global economic recovery will be volatile and uneven over the next three years.

Now in its 17th edition, the report encourages leaders to think outside the quarterly reporting cycle and create policies that manage risks and shape the agenda for the coming years. It explores four areas of emerging risk: cybersecurity; competition in space; a disorderly climate transition; and migration pressures, each requiring global coordination for successful management.

“Health and economic disruptions are compounding social cleavages. This is creating tensions at a time when collaboration within societies and among the international community will be fundamental to ensure a more even and rapid global recovery. Global leaders must come together and adopt a coordinated multistakeholder approach to tackle unrelenting global challenges and build resilience ahead of the next crisis,” said Saadia Zahidi, Managing Director, World Economic Forum.

Carolina Klint, Risk Management Leader, Continental Europe, Marsh, said: “As companies recover from the pandemic, they are rightly sharpening their focus on organizational resilience and ESG credentials. With cyber threats now growing faster than our ability to eradicate them permanently, it is clear that neither resilience nor governance are possible without credible and sophisticated cyber risk management plans. Similarly, organizations need to start understanding their space risks, particularly the risk to satellites on which we have become increasingly reliant, given the rise in geopolitical ambitions and tensions.”

Peter Giger, Group Chief Risk Officer, Zurich Insurance Group, said: “The climate crisis remains the biggest long-term threat facing humanity. Failure to act on climate change could shrink global GDP by one-sixth and the commitments taken at COP26 are still not enough to achieve the 1.5 C goal. It is not too late for governments and businesses to act on the risks they face and to drive an innovative, determined and inclusive transition that protects economies and people.”

The report closes with reflections on year two of the COVID-19 pandemic, yielding fresh insights on national-level resilience. The chapter also draws on the World Economic Forum’s communities of risk experts – the Chief Risk Officers Community and Global Future Council on Frontier Risks – to offer practical advice for implementing resilience for organizations.

TheGlobal Risks Report 2022 has been developed with the invaluable support of the World Economic Forum’s Global Risks Advisory Board. It also benefits from ongoing collaboration with its Strategic Partners, Marsh McLennan, SK Group and Zurich Insurance Group, and its academic advisers at the Oxford Martin School (University of Oxford), the National University of Singapore and the Wharton Risk Management and Decision Processes Center (University of Pennsylvania).

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Global growth forecast to slow to 1.9% in 2023

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Senior UN economists warned on Wednesday that intersecting crises are likely to add further damage to the global economy, with growth set to slow from three per cent in 2022 to 1.9 per cent this year.This will be one of the lowest growth rates in recent decades, apart from during the 2007-8 financial crisis and the height of the COVID-19 pandemic.

“In most countries we expect that private consumption and investment will weaken due to inflation and higher interest rates”, said Ingo Pitterle, Senior Economist at the UN Department of Economic and Social Affairs (UNDESA). “Several countries will see a mild recession before growth is forecast to pick up in the second half of this year and into 2024”.

The findings come amid the backdrop of the pandemic, the war in Ukraine and resulting food and energy crises, surging inflation, debt tightening, as well as the climate emergency. 

In the near term, the economic outlook is gloomy and uncertain with global growth forecast to moderately pick up to 2.7 per cent in 2024.

However, this is highly dependent on the pace and sequence of further monetary tightening – rising interest rates – the consequences of the war in Ukraine, and the possibility of further supply-chain disruptions.

Stronger fiscal measures needed 

The report warns that the findings also threaten the achievement of the 17 Sustainable Development Goals (SDGs).

This is not the time for short-term thinking or knee-jerk fiscal austerity that exacerbates inequality, increases suffering and could put the SDGs farther out of reach. These unprecedented times demand unprecedented action,” said António Guterres, UN Secretary-General. 

“This action includes a transformative SDG stimulus package, generated through the collective and concerted efforts of all stakeholders,” he added.

Gloomy economic outlook 

Both developed and developing countries are threatened with the prospects of recession during this year, according to the report.

Growth momentum significantly weakened in the United States, the European Union and other developed economies in 2022. This adversely impacted the rest of the global economy in multiple ways.

Tightening global financial conditions coupled with a strong dollar, exacerbated fiscal and debt vulnerabilities in developing countries. 

The analysis found that over 85 per cent of central banks worldwide tightened monetary policy and raised interest rates in quick succession since late 2021, to tame inflationary pressures and avoid a recession. 

Global inflation which reached a multi-decade high of about 9 per cent in 2022, is projected to ease but remain elevated at 6.5 per cent in 2023.

Weaker job recovery, rising poverty

The report found that most developing countries saw a slower job recovery in 2022 and continue to face relatively high levels of unemployment. 

Disproportionate losses in women’s employment during the initial phase of the pandemic have not been fully reversed, with improvements mainly arising from a recovery in the informal sector.

Slower growth, coupled with elevated inflation and mounting debt vulnerabilities, threatens to further set back hard-won achievements in sustainable development, it warns.

Needs soaring

DESA points out that already in 2022, the number of people facing acute food insecurity had more than doubled compared to 2019, reaching almost 350 million

A prolonged period of economic weakness and slow income growth would not only hamper poverty eradication, but also constrain countries’ ability to invest in the SDGs more broadly, it states.

“The global community needs to step up joint efforts to avert human suffering and support an inclusive and sustainable future for all,” said Li Junhua, United Nations Under-Secretary-General for DESA.

International cooperation key

The report calls for governments to avoid fiscal austerity, which would stifle growth and disproportionately affect the most vulnerable groups, as well as hinder progress in gender equality and development prospects, for generations.

It calls for reallocation and reprioritization in public spending policy, through direct interventions that will create jobs and reinvigorate growth. 

This will require strengthening social protection systems and ensuring continued support through targeted and temporary subsidies, cash transfers, and discounts on utility bills, and can be complemented with reductions in consumption taxes or customs duties, it states.

Investing in people

The report points to strategic public investments in education, health, digital infrastructure, new technologies and climate change mitigation and adaptation to achieve large social returns, accelerate productivity growth, and strengthen resilience to economic, social and environmental shocks.

It estimates that additional SDG financing needs in developing countries, amount to several trillion dollars per year. 

Urgent stronger international commitment is urgently needed to expand access to emergency financial assistance; restructure and reduce debt burdens across developing countries; and scale up SDG financing, the report warns.

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2023 Deloitte Global Marketing Trends Report Outlines Opportunities in Uncertain Times

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With a new year comes new challenges, but also opportunities as business leaders and marketers set their sights on embracing trends and solutions that can set them up for success. Curated through surveys and in-depth conversations with more than 1,000 C-suite executives, Deloitte’s “2023 Global Marketing Trends” report offers guidance through uncertainties that business leaders may face, while presenting meaningful approaches to consider which may help propel businesses forward. The report focuses on four topics: financial uncertainty, sustainability, creativity and tech trends to watch. Listed are a few key recommendations marketers can consider going into 2023:

  • Invest in digital technologies, platforms, new markets and customer personalization.
  • Improve sustainability efforts within internal marketing practices and establish long-term commitments.
  • Make more room for creativity by bringing the rest of the organization along for the ride.
  • Consider laying the foundation for metaverse or blockchain adoption.

Why this matters

Amid fluctuating and uncertain economic indicators of 2023, marketers are focusing on investments that can help their organizations be resilient in the face of rapid change. As new platforms disrupt existing digital marketing models and slipping consumer confidence requires focused attention on customer loyalty and innovating new growth opportunities, the “2023 Global Marketing Trends” report offers inspiration and motivation to help bring considerable, creative and lasting impact. Marketers, business leaders and C-suite executives can glean insights from the report as they set their sights on what 2023 holds for the business. The report outlines solutions curated directly from leaders and CMOs alike who have ushered in their thoughts, predictions and guidance to help drive brands forward in an ever-changing world.

Key takeaways

Brands answer economic instability through investment: Brands surveyed continue to reiterate economic instability and inflation as a top concern as in 2023. But, instead of hedging their bets and cutting costs, brands are well-prepared to answer this instability and uncertainty with an investment mindset that grows their organization’s capabilities and capacity to be resilient in the face of rapidly changing economic conditions

Through interviewing, CMOs identified their top-three priorities in the face of a potential economic downturn:

  • Accelerating the move to new digital technologies or platforms (Metaverse, AI, social platforms, AR and digital currencies).
  • Expanding into new markets, segments, or geographies.
  • Implementing systems or algorithms to enhance customer personalization.

CMOs drive growth through internal sustainability efforts: As consumer concerns around sustainability issues grow, brands surveyed are now concentrating their efforts on shoring up their own internal sustainability practices. This focus inward is a strong sign that brands are looking to make a more authentic impact over the longer-term in order to build trust with consumers.

Brands reported that their top three priorities for sustainability efforts this year include: 

  • Improving sustainability of internal marketing practices (51%).
  • Promoting more sustainable product and service offerings (47%),
  • Establishing long-term sustainability commitments (e.g. “by 2030, our organization will…”) (45%).

Creativity as a force for growth: As noted in the 2022 “Creative Business Transformation study“, developed in partnership with Deloitte Digital and Cannes LIONS, there is a growing creativity gap through diminishing creative leadership in the C-suite and declining creativity skills among CMOs and their marketing talent. 2023 may present an opportunity for individual brands to rise above the competition by making more room for creativity. Research shows that high-growth brands (defined as those with annual revenue growth of 10% or more) are more likely than their negative-growth peers to have the mindset and processes in place that allow creativity to flourish.

CMOs might consider the following strategies to be the creative leader in their own organizations:

  • Redefine what creativity can offer.
  • Bring the rest of the organization along for the ride.
  • Inspire the organization to think differently.

Rising technologies to watch: Marketers are now faced with big decisions about when and how to invest in adopting cutting-edge marketing practices as new technologies take center stage as top trends for marketers to watch.

Marketers cited 2023 top trends by the numbers:

Metaverse: About 80% of marketing executives surveyed across the energy, resources, and industrials (ER&I) and life sciences and health care (LS&HC) industries are gravitating toward the metaverse within the next two years.

Digital Currencies: 41% of CMOs surveyed plan to support their advertising strategy with blockchain in the next 12 months.

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Weak Governance in MENA Region Worsens Deepening Land Crisis

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Weak governance exacerbates the deepening land crisis in the Middle East and North Africa region, according to a new World Bank report that urges broad reforms to improve land use and access amid increasing stress from climate change and population growth.

Titled “Land Matters: Can Better Governance and Management of Scarcity Prevent a Looming Crisis in the Middle East and North Africa?”, the report shows how continuing land deterioration in a region that is 84 percent desert worsens water scarcity issues that threaten food security and economic development.

“Now is the time to examine the impact of land issues that loom large in many public policy decisions but aren’t always explicitly acknowledged,” said Ferid Belhaj, the World Bank Vice President for the Middle East and North Africa. “Quite simply, land matters. MENA’s growing population and the impact of climate change add urgency to addressing the land crisis.”

The report uses satellite imagery data to show that cropland in MENA countries decreased by 2.4 percent over the 15-year period from 2003-2018, which was the world’s sharpest drop in a region that already had the lowest cropland per capita and little margin for agricultural expansion. During the same period, the MENA population increased by 35 percent and is estimated to expand by another 40 percent to 650 million people in 2050.

Comparing land cover data with statistics on wealth inequality and other indicators, the report shows a correlation between land degradation and poor governance. In addition, state ownership of land is highest in the MENA region, but governments fail to manage land assets in ways that generate public revenues, the report says, while access to land is a severe constraint for 23 percent of firms in the manufacturing and service sectors.

Also impeding land access are social norms and laws regarding property that are more unfavorable for women in the MENA region compared to other regions, according to the report. In particular, women in MENA countries come under strong social pressure to renounce their inheritance rights over property, often without fair compensation.

“You cannot achieve sustainable economic and social development if people and businesses lack proper access to land,” said Harris Selod, a World Bank senior economist and co-author of the report.

Reforms proposed by the report include establishing transparent market-driven processes to value and transfer land, as well as developing complete inventories of public land and improving the registration of land rights. These are necessary steps to support more efficient land use and land management decisions and to ensure that land serves social, economic and fiscal functions in a region where property taxes represent less than one percent of GDP.

Land policies can also help reduce gender inequalities. A tax on male beneficiaries when women renounce their inheritance rights to property could help reduce the gender gap, with the money collected funding initiatives promoting women’s empowerment, the report says.

“Increasing land scarcity leads to strategic trade-offs about the best use of land to meet competing economic, social, and sustainability objectives,” said Anna Corsi, a World Bank senior land administration specialist and co-author of the report. “However, the holistic approach needed to address core development issues of land policy is critically lacking in the MENA region.”

The report notes that land scarcity and governance issues vary throughout the region, with countries requiring approaches that are tailored to their unique challenges. For example, wealthy Gulf Cooperation Council countries face severe land scarcity but have better land administration, while the Maghreb countries as well as Iran, Iraq, and Syria are more seriously challenged by land governance issues with less severe land scarcity. A third group — Djibouti, Egypt, Yemen, and the West Bank and Gaza — faces serious challenges in both governance and scarcity of land.

In stressing that “land matters”, the report argues that urgently addressing the MENA land crisis now exacerbated by climate change and population growth is essential for the region’s sustainable economic and social development.  

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