Prolonged economic recession tops WEF COVID-19 worry list

The survey of the world's top risk professionals also warned that mass bankruptcies and industry failures are likely.

    A World Economic Forum report stresses that the coronavirus has exposed how many people - even in some of the world’s richest countries -live without reserves of cash, as shown here by the queue at a food distribution centre in Queens, New York, the United States [File: Eduardo Munoz/Reuters]
    A World Economic Forum report stresses that the coronavirus has exposed how many people - even in some of the world’s richest countries -live without reserves of cash, as shown here by the queue at a food distribution centre in Queens, New York, the United States [File: Eduardo Munoz/Reuters]

    A prolonged economic recession, mass bankruptcies and industry failures top a worry list of likely outcomes from the fallout of the coronavirus pandemic, a report from the World Economic Forum (WEF) released on Tuesday shows. 

    The report (PDF) titled COVID-19 Risks Outlook: A Preliminary Mapping and Its Implications, surveyed 350 risk professionals. Rather than attempt to make forecasts, WEF's goal is to encourage political and business leaders to more proactively navigate the emerging risks landscape.   

    "As well as managing the immediate impact of the pandemic, leaders must work with each other and with all sectors of society to tackle emerging known risks and build resilience against the unknown," said WEF Managing Director Saadia Zahidi in a press release. 

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    WEF asked those surveyed to rank 31 risks across three categories including "most likely" for the world, "most concerning" for the world and "most worrisome" for companies.

    Dominating the list of risks most likely to materialise was a lasting global downturn, with some two-thirds of those surveyed ranking it as the number one most likely outcome for the world. 

    One-half of those surveyed identified bankruptcies among big firms as well as small and medium-sized enterprises and a wave of industry consolidation as the second most likely outcome.

    Pulling up at number three on the list of most likely outcomes was the failure of industries in certain countries to recover. Soaring levels of unemployment - especially among youths - and tighter restrictions on the movement of people and goods across borders rounded out the top five.  

    Dominating the list of greatest concerns for the world were a protracted economic downturn, persistently high unemployment and either a second global outbreak of COVID-19 or a different infectious disease.

    A long recession and a wave of bankruptcies also claimed the top two spots on the list of most worrisome developments for the companies, while cyberattacks and data fraud resulting from a sustained shift in working patterns rounded out the top three. 

    The report, produced in partnership with Marsh & McLennan and Zurich Insurance Group, urges leaders to act now against an onslaught of future systemic shocks such as the climate crisis, geopolitical turbulence, rising inequality, strains on mental health and strained health systems.

    Those participating in the survey further stressed that the pandemic will have long-lasting effects, as high unemployment shatters consumer confidence, exacerbates inequality and strains social safety nets.

    "With significant pressures on employment and education - over 1.6 billion students have missed out on schooling during the pandemic - we are facing the risk of another lost generation," stressed Peter Giger, Group Chief Risk Officer at the Zurich Insurance Group.

    With businesses forced to rethink the structures they formerly relied on, the private sector and governments will have to work closely together to forge a way ahead and prepare for future disruptions, those surveyed added. 

    "Along with major investments to improve health systems, infrastructure, and technology, one of the outcomes of this crisis has to be that societies become more resilient and capable of withstanding future pandemics and other major shocks," said John Doyle, President and CEO of Marsh. 

    In addition to mapping risks, WEF released an ebook (PDF) in which scientists, thought leaders and researchers voice their opinions on the biggest challenges posed by coronavirus and the opportunities that can be seized in the near future to ensure to a more fair and sustainable post-coronavirus world.

    "We now have a unique opportunity to use this crisis to do things differently and build back better economies that are more sustainable, resilient and inclusive,” said Zahidi.

    SOURCE: Al Jazeera News