'Pandemic to cause fiscal distress, social discontent'

ANKARA

The prolonged global recession, soaring unemployment, another disease outbreak, and protectionism top the list of near-term worries for companies, according to a World Economic Forum (WEF) report released on Tuesday.

According to the COVID-19 Risks Outlook report, economic distress and social discontent will rise over the next 18 months unless world leaders, businesses, and policy-makers work together to manage the fallout of the pandemic.

The findings come from 350 senior risk professionals who were asked to look at the next 18 months and rank their biggest concerns in terms of likelihood and impact for the world and for businesses.

The immediate economic fallout from the COVID-19 pandemic dominates companies’ risk perceptions, ranging from a prolonged recession to the weakening fiscal position of major economies, tighter restrictions on the cross-border movement of goods and people, and the collapse of a major emerging market, the report states.

Recession top concern

The report urged leaders to initiate action against potential future systemic shocks such as the climate crisis, geopolitical turbulence, and rising inequality.

“Two-thirds of respondents identified a prolonged global recession as a top concern for business,” the report said.

One-half identified bankruptcies and industry consolidation, failure of industries to recover and a disruption of supply chains as crucial worries, it added.

Geopolitical disruptions and tighter restrictions on the movement of people and goods were also high on the list of worries.

Another lost generation

“The pandemic will have long-lasting effects, as high unemployment affects consumer confidence, inequality and well-being, and challenges the efficacy of social protection systems,” said Peter Giger, chief risk officer at Zurich Insurance Group.

He said that COVID-19 has shown the need to focus on existential risks, with climate change being one of them.

“As we reboot our economies, changes in working practices and in attitudes towards traveling, commuting and consumption all point to new ways to achieve a lower-carbon and more sustainable future,” he said.

Giger said over 1.6 billion students have missed out on schooling during the pandemic and warned the world faced the risk of another lost generation.

He said decisions taken now by world leaders and policy-makers will determine how these “risks or opportunities play out.”