Briefing | Income inequality and Global risks 2017
The World Economic Forum has outlined that the top five risks facing the global economy in 2017 are: rising income and wealth disparity; climate change; increased popularisation in societies; increased cyber-dependence and Internet facilities; and an ageing population.
1. Rising income inequality and
Over the last three decades, the share of income going to the wealthy has increased in the UK, US, Canada, Ireland and Australia, but not Germany France, Japan or Sweden. Although income-inequality has been improving in many countries, Latin America and the Caribbean remains the most income-unequal region in the world, and if the trend continues, the richest one per cent will accumulate more wealth than the remaining 99 per cent in less than two decades, according to the World Economic Forum. This is exacerbated by poorly designed tax systems and tax laws that facilitate tax evasion and tax avoidance. These contribute to fiscal revenue shortfalls that are normally corrected by levying more tax on those with lower incomes. Governments in Caribbean and Latin American countries must seek to correct these issues.
2. Climate Change
The cyclical weather phenomenon El Nino is over, but 2017 is still forecasted to be a year of adverse weather conditions. Global warming will continue, and as a consequence, will have effects. These should continue to be taken into consideration in governments' policy decisions surrounding sustainable development.
3. Increased Popularisation in societies
The World Economic Forum has highlighted that they are concerned that democracy itself is in crisis. This has been due to several factors, including distrust in government officials and the news; government workers alienated by their compensation packages, and failure of politics to provide meaningful, positive economic development. Voter turnout in the last local government election was less than 30 per cent.
4. Increasing Cyber Dependence
People are becoming more and more reliant on smart technology and the Internet to carry out their daily functions properly. Machines and processes have also become more reliant on the Internet. While this might aid in the efficiency of processes, it is also leaving many processes vulnerable and susceptible to cybercrime and attacks.
5. Ageing Population
Many countries around the world have an ageing population due to many cultural or innate structures of their economies. Jamaica, for example, has an ageing population due to migration of young professionals and loss of life of many young people who become gangsters because they have nothing to occupy their time. Many of Jamaica's youth who are unengaged enter into crime, and most of them are killed before their 30th birthday. This has contributed to an ageing population. A stronger welfare system is always required to combat the pressure that an ageing population puts on the State.
Along with the above challenges, the World Economic Forum has highlighted different categories of risks they believe will be of significance in 2017. They have outlined five key challenges that will require tendering to in 2017. These are:
1. Inculcating better cohesion and long-term strategic thinking towards market capitalisation
2. Rejuvenating each economy
3. Improving acceptance of identity and inclusiveness to improve how politics impact communities
4. Exploit fully the benefits but minimising the risks associated with the fourth industrial revolution
5. Improving cooperation between global economies.
The most important risks interconnections for 2017 are: Great social instability arising from unemployment and under employment; large-scale involuntary migration that might impact countries negatively; failure of climate change prevention-strategies; failure of national governance and profound social instability and interstate conflict with regional consequences.
The World Economic Forum Top five risks that are likely to have negative economic, environmental, societal effects, in 2017 are: Extreme weather events, large-scale involuntary migration, major natural disasters, large-scale terrorist attacks, massive incidents of data fraud or theft.
The World Economic Forum Top five risks that will have the largest impact on the global economy if they occur are: major systematic financial failure; water supply crisis; food crisis; chronic fiscal imbalances; and extreme volatility in agriculture and energy prices.