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15 years of risk: from economic collapse to planetary devastation – World Economic Forum

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  • Risk perception has shifted from the economy to the climate.
  • Greater knowledge and experience of climate change prompted the shift.
  • Short-termism could create blind spots and limit integrated efforts to mitigate risks.

The global risk landscape seems to be changing faster than our ability to manage it.

When the World Economic Forum first launched the Global Risks Perception Survey (GRPS) in 2006, economic risks filled most of the top spots by likelihood and impact.

Fifteen years and a Great Recession later, the world economy is again facing serious obstacles – inequality, protectionism and slowdown – yet economic risks have moved away from the survey’s spotlight.

In this year’s Global Risks Report – the 15th edition – all five of the top risks by likelihood, and three by impact are climate-related. Never before has one issue dominated the survey in this way, not even through the 2008 – 2009 financial crisis, when economic concerns occupied at most three out of the five top spots by likelihood, and four by impact.

Image: World Economic Forum Global Risks Report 2020

What can explain this marked shift in risk perception – from economic to climate – even though many economic risks remain?

Examining the shift in risk perceptions

Four trends can explain why risk perceptions have shifted so drastically:

1) Climate change is a priority for youth

The world’s young people are tremendously concerned about the fate of the planet. Ninety percent of respondents to the GRPS from the Forum’s Global Shapers Community – younger community leaders – believe that “extreme heat”, “destruction of ecosystems” and “health impacted by pollution” will worsen in 2020. They also rate the impact of these events as extreme and imminent.

Young people have made their voices heard across the world, not only using social media, but using their feet and their ballot papers. Last year, millions of schoolchildren participated in climate strikes worldwide, young Europeans were decisive in the Greens’ parliamentary election success, and recent polling suggests environmental policy will be pivotal for young Americans in the 2020 elections. This generation’s activism has likely influenced global risk perceptions.

Image: World Economic Forum Global Risks Perception Survey 2019-2020

2) Exposure to better information

More accurate climate-change data has been released in recent years. The IPBES Global Assessment Report on Biodiversity and Ecosystem Services, a landmark assessment of the state of the planet, was released in May 2019. Similarly, the Met Office Hadley Centre’s HadSST4 dataset, the most widely used source of sea surface temperature data, was updated just last year to show that oceans have warmed more than previously estimated. Both warned of a much more dire future for the planet – and a shorter timeframe to avert it.

3) Direct contact with climate change

Extreme weather events have hit every continent and the frequency of natural disasters has increased to one per week. Over the past few years, Belgium, France, Germany, Luxembourg, the Netherlands and the United Kingdom have seen record-breaking heatwaves; fierce wildfires have blazed through Australia, Canada, Chile, Spain and the US; while Bangladesh, India, Thailand and Sri Lanka have registered severe and longer droughts. As a result, more people are feeling the impacts of climate change, many of whom are in regions of the world that were previously unaffected.

4) Internalization of economic stagnation

Years of overcoming economic hardship may have led respondents to believe that economic risks can be weathered in a way that climate change cannot. After all, the 2010s were the slowest post-crisis period in terms of growth since the 1970s – the world economy has been stuck at approximately 3% growth since the Great Recession.

Moreover, newer generations may no longer see a precarious economy as a risk, but simply as a reality. For example, Americans born between 1980 and 1989 are 34% less well off than earlier generations, 67% of young Latin Americans have experienced financial instability, and those in their 30s in the United Kingdom are “the first post-war cohort not to at least start working-age life with higher incomes than their predecessors”.

The environmental wager

It is no doubt welcome news that stakeholders are worried about the fate of the planet. It means there is increased awareness of the grave threats of environmental degradation; which hopefully will translate into more ambitious climate action.

However, the drastic and relatively quick shift in risk perceptions – from economic to environmental in the GRPS – is potentially troubling. Because environmental and economic risks are inextricably linked, risk perceptions that account for only one over the other mean blind spots may be arising and integrated mitigation efforts may be lacking.

The stable – albeit sluggish – economy of the past decade has incentivized the development of green practices, but years of progress could be offset by a tougher economic context. The global economy is showing signs of a slowdown that could last for many years, and if stakeholders view economic and environmental risks as distinct, there is a higher likelihood that short-termism will take hold as creating opportunities for economic advancement becomes more pressing.

In the near future, immediate economic and political concerns could arise, but they should not fully displace ongoing environmental risks from our perceptions.

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Economy

Singapore cuts 2020 GDP outlook again as virus batters economy – TheChronicleHerald.ca

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By Aradhana Aravindan and John Geddie

SINGAPORE (Reuters) – Singapore downgraded its 2020 gross domestic product forecast for the third time on Tuesday, the trade ministry said, as the bellwether economy braces for its deepest ever recession.

The city-state lowered its GDP forecast to a contraction range of -7% to -4% from the prior range of -1% to -4%.

Singapore’s economy shrank 0.7% year-on-year in the first quarter and 4.7% on a quarter-on-quarter, a less severe decline than advance estimates, although officials and analysts warned of more pain ahead.

“There continues to be a significant degree of uncertainty over the length and severity of the COVID-19 outbreak, as well as the trajectory of the economic recovery,” said Gabriel Lim, permanent secretary at the ministry of trade and industry.

Following the news, the central bank chief economist Ed Robinson said monetary policy remains unchanged and will next be reviewed in October, as planned.

Singapore also downgraded its 2020 forecast for non-oil domestic exports to -4.0% to -1.0%, from -0.5% to 1.5% previously.

Exports have been a rare bright spot for the economy in recent months mainly due to a surge in demand for pharmaceuticals.

Analysts expect the trade-reliant economy to see a deeper contraction in the second quarter due to a two-month lockdown, dubbed a “circuit breaker” by authorities, in which most workplaces closed to curb the spread of the novel coronavirus.

The city-state has among the highest number of infections in Asia and has said that easing of the lockdown from next month will only be done gradually.

“The downward revision…implies a significant deterioration in the second-quarter momentum due to the circuit breaker period as well as a weak recovery trajectory,” said Selena Ling, OCBC Bank’s head of treasury research and strategy.

The government first flagged the possibility of recession in February when it cut its 2020 GDP forecast to -0.5% to 1.5%, from 0.5% to 2.5% previously.

Singapore’s finance minister is set to deliver the latest in a string of multi-billion-dollar economic packages to offset the hit to businesses and households from the pandemic later on Tuesday.

(Reporting by John Geddie, Aradhana Aravindan and Fathin Ungku; Editing by Sam Holmes)

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Singapore cuts 2020 GDP outlook again as virus batters economy – The Guardian

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By Aradhana Aravindan and John Geddie

SINGAPORE (Reuters) – Singapore downgraded its 2020 gross domestic product forecast for the third time on Tuesday, the trade ministry said, as the bellwether economy braces for its deepest ever recession.

The city-state lowered its GDP forecast to a contraction range of -7% to -4% from the prior range of -1% to -4%.

Singapore’s economy shrank 0.7% year-on-year in the first quarter and 4.7% on a quarter-on-quarter, a less severe decline than advance estimates, although officials and analysts warned of more pain ahead.

“There continues to be a significant degree of uncertainty over the length and severity of the COVID-19 outbreak, as well as the trajectory of the economic recovery,” said Gabriel Lim, permanent secretary at the ministry of trade and industry.

Following the news, the central bank chief economist Ed Robinson said monetary policy remains unchanged and will next be reviewed in October, as planned.

Singapore also downgraded its 2020 forecast for non-oil domestic exports to -4.0% to -1.0%, from -0.5% to 1.5% previously.

Exports have been a rare bright spot for the economy in recent months mainly due to a surge in demand for pharmaceuticals.

Analysts expect the trade-reliant economy to see a deeper contraction in the second quarter due to a two-month lockdown, dubbed a “circuit breaker” by authorities, in which most workplaces closed to curb the spread of the novel coronavirus.

The city-state has among the highest number of infections in Asia and has said that easing of the lockdown from next month will only be done gradually.

“The downward revision…implies a significant deterioration in the second-quarter momentum due to the circuit breaker period as well as a weak recovery trajectory,” said Selena Ling, OCBC Bank’s head of treasury research and strategy.

The government first flagged the possibility of recession in February when it cut its 2020 GDP forecast to -0.5% to 1.5%, from 0.5% to 2.5% previously.

Singapore’s finance minister is set to deliver the latest in a string of multi-billion-dollar economic packages to offset the hit to businesses and households from the pandemic later on Tuesday.

(Reporting by John Geddie, Aradhana Aravindan and Fathin Ungku; Editing by Sam Holmes)

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Economy

Canadians are starting to feel a little better about the economy — but not about the housing market – Financial Post

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Consumer confidence continues to show signs of improving in Canada, inching higher for a fourth straight week.

The Bloomberg Nanos Canadian Confidence Index, based on a random survey, ticked up slightly to 39.3 last week. While the index remains near its worst-ever readings recorded last month, the rise in confidence in recent weeks suggests negative sentiment may be finding a floor amid talk of reopening the economy. Sentiment around housing, however, remains at near-record lows.

Every week, Nanos Research surveys 250 Canadians for their views on personal finances, job security and their outlook for the economy and real estate prices. Bloomberg publishes four-week rolling averages of the 1,000 responses.

The polling suggests the mood is still dire, but with improvements on most questions.

Regionally, the gains in sentiment have been mostly in Western Canada, aided by a recent rebound in oil prices and relatively fewer coronavirus cases — British Columbia, for example, has one of the lowest death rates in North America. Confidence in Ontario and Quebec remain at near record lows.

The share of Canadians who say their personal finances have worsened over the past year dropped to 36.7 per cent, from as high as 42.3 per cent last month. That’s still about 10 percentage points above the average for this question over the past five years.

Canadians remain sour about the nation’s economic outlook, but are less pessimistic than they were a few weeks ago. About 73 per cent of respondents believe the economy will worsen, down from 80 per cent last month.

About one in five Canadians remains worried about job security, about double the historical average for the question. That’s down from a peak of about 25 per cent a few weeks ago.

Housing is an outlier. Even as sentiment has improved around the economic outlook and personal finances, expectations around real estate are weakening. Over the past two weeks, almost half of respondents anticipate a drop in home prices, which is a record and about three times above the average for this question.

Bloomberg.com

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