2022 risks creating deeper economic and social divides globally … but there is also opportunity to head these crises off

Week of 10 January 2022

2022 risks creating deeper economic and social divides globally … but there is also opportunity to head these crises off

Our key takeaway: WEF’s outlook for 2022 hinges on whether the world can effectively tackle macro-issues like the pandemic and equitable economic recovery, an effective climate transition, and new drivers (and barriers) for migrants affected by both the pandemic and climate crises.

The World Economic Forum, in partnership with Marsh McLennan, SK Group and Zurich Insurance Group, published its annual report predicting the greatest global risks for 2022:

    • COVID-19 will continue to have resounding effects, splitting global economies on “diverging trajectories”: The persistent economic challenges caused by the COVID-19 pandemic have not significantly abated since the start of the pandemic, and the outlook remains poor, especially given rising COVID cases: “at the time of writing, the global economy was expected to be 2.3% smaller by 2024 than it would have been without the pandemic,” coupled with predicted rising commodity prices, inflation and debt globally. WEF reports that “the economic fallout from the pandemic is compounding with labour market imbalances, protectionism, and widening digital, education and skills gaps that risk splitting the world into divergent trajectories”: while some countries with rapid vaccine rollout will recover more quickly and regain resilience from the economic shocks of the pandemic, the large number of countries where vaccinations are low and rates of illness are high will result in “continued acute stress on health systems, digital divides and stagnant job markets. These divergences will complicate the international collaboration needed to address the worsening impacts of climate change, manage migration flows and combat dangerous cyber-risks.”
    • We’re on track for a chaotic climate transition: WEF predicts that, due to “the complexities of technological, economic and societal change at this scale, and the insufficient nature of current commitments, it is likely that any transition that achieves the net zero goal by 2050 will be disorderly.” This is likely to exacerbate inequalities—especially between those countries where economies bounce back after COVID and those that continue to stagnate in the face of persistent disease. This inequality is likely to create additional barriers to international cooperation on climate change. At a societal level, a chaotic transition away from carbon-intensive industries “will trigger economic volatility, deepen unemployment and increase societal and geopolitical tensions. Adopting hasty environmental policies will also have unintended consequences for nature” and may lose public buy-in.
    • More people want to migrate … but there are new barriers in their way: Growing global economic and social uncertainty, along with the impacts of climate change and political instability, are driving millions of people to migrate from home. However, their pathway will be blocked by “the lingering effects of the pandemic, increased economic protectionism and new labour market dynamics,” leading to increasing risks of conflict and instability, economic and labour inequalities, and failed opportunities for people to recover their pre-pandemic livelihoods.