Report shows biggest threats to global economy

 

 

By Rose de la Cruz

 

The prolonged fall in major stock markets of the world and the growing protectionist policies of the United States are threats that could destabilize the global economy and political order, according to the Economist Intelligence Unit, the world’s leading resource for economic and business research, forecasting and analysis.

 

Following closely are the possible outbreak of hostilities in the South China Sea due to festering territorial disputes and a major cyber-attack crippling corporate and government activities.

 

Other key risks identified include a disorderly and prolonged Chinese slowdown, a major military confrontation on the Korean peninsula, and outright conflict in the Middle East between Iran and Saudi Arabia.

 

The EIU identifies and assesses the top ten major risks to the global political and economic order. It finds that while the global economy has seen periods of high risk before, what is unique about this period are the risks associated with the US questioning its role in the world at the same time as China is becoming more assertive. But global risk is not just about the two biggest economies; risks also transcend boundaries on the political, military and financial spheres.

 

The report details how these various risks could morph into threats that destabilize large parts of the world. Each of the risks is not only outlined, but also rated in terms of its likelihood and potential impact on the global economy. This enables distinction to be drawn between the so-called "black swan" events of low probability and very high impact from those risks with a higher likelihood that need to be planned for in more detail.

 

Philip Walker, Risk Practice Director for EIU said: "There has arguably never been a period of such robust economic growth, low inflation and high employment that has been coupled with such a prevailing sense of unease with global conditions. “

 

He adds: “Policymakers, companies and populations are facing a wide range of major threats that could well upset the traditional global order in the coming years. It is important to assess and prepare for a likely tumultuous global environment in order not just to mitigate damage, but also take advantage of opportunities that will undoubtedly arise along the way."

 

The EIU provides accurate and impartial intelligence for companies, government agencies, financial institutions and academic organizations around the globe, inspiring business leaders to act with confidence since 1946.

 

The EIU products include its flagship Country Reports service, providing political and economic analysis for 199 countries, and a portfolio of subscription-based data and forecasting services. The company also undertakes bespoke research and analysis projects on individual markets and business sectors.

 

Headquartered in London, UK, the EIU has offices in more than 40 cities and a network of some 750 country experts and analysts worldwide. It operates independently as the business-to-business arm of The Economist Group, the leading source of analysis on international business and world affairs.

 

 

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