Economy
We’re in a new ‘polycrisis’ era
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Multiple concurrent economic, political, and ecological shocks are converging to rock the globe in the next decade, and the world is playing catch-up to address them.
The next 10 years are shaping up to be a transformational period for the world economy, which is under threat from a number of interrelated crises. The veteran economist and well-known pessimist Nouriel Roubini, also known as Dr. Doom for his gloomy forecasts of the future, broke down 10 massive economic challenges in his recent book Megathreats, ranging from unprecedented debt chaos to global climate disruption.
The world has faced each of these crises individually before, but experts including Roubini and economic historian Adam Tooze fear that these threats could morph into a singular “polycrisis,” a state of risk where multiple crises intersect to amplify their collective impact. And now one of the world’s premier forums for international business and political cooperation agrees we are on the brink of such a crisis.
While governments and business leaders around the world are racing to meet short-term challenges such as rising inflation and recession risks, long-term risks may converge into a polycrisis by the end of the decade according to a new report on global risks by the World Economic Forum.
“The world’s collective focus is being channeled into the ‘survival’ of today’s crises,” the WEF’s managing director Saadia Zahidi wrote in a preface to the report. “Yet much-needed attention and resources are being diverted from newly emerging or rapidly accelerating risks.”
Long-term threats
The report, released Wednesday ahead of the WEF’s annual conference of economic and political leaders in Davos, Switzerland, next week, interviewed 1,200 global risk experts associated with the WEF hailing from academia, business, and politics. Experts were surveyed on their views regarding major short- and long-term risks facing the world in the decade ahead.
While issues such as rising cost of living, slow economic growth, and tight global food and energy supplies rank as pressing short-term global risks, the report found that long-term threats primarily center on ecological crises.
The four most pressing long-term risks over the coming decade are failure to mitigate climate change, failure to adapt to climate change, extreme weather events, and the threat of biodiversity collapse. Left unaddressed, the WEF says, short- and long-term risks could combine to create a collective crisis world leaders may not be prepared for.
“These present and future risks can also interact with each other to form a ‘polycrisis’—a cluster of related global risks with compounding effects, such that the overall impact exceeds the sum of each part,” the report said.
The “polycrisis” era
The WEF’s report adds to a growing chorus of warnings about the collective risks humanity could face in the next decade.
Tooze even popularized the term “polycrisis” as a complex network of entangled crises that once put together make the task of addressing all of them significantly harder. He heralded the arrival of a polycrisis age in a Financial Times op-ed last year, warning that geopolitical crises combined with the threat of global ecological collapse were just the beginning.
“Our tightrope walk with no end is only going to become more precarious and nerve-racking,” he wrote, as isolationism takes hold and global cooperation becomes less tenable.
The WEF report made the same case that while global cooperation is normally a “guardrail” against global risks, geopolitical dynamics in the first half of the 2020s stemming from U.S.-China tensions and the Ukraine war threaten to weaken international ties to tackle climate change and global development when they are most needed.
The Ukraine war has also refocused many governments’ priorities toward short-term risks, the WEF said, by triggering global food and energy shortages while aggravating inflation worldwide. Long-term risks have consequently received relatively little attention, the report warned, contributing to the risk of a polycrisis.
“In the years to come, as continued, concurrent crises embed structural changes to the economic and geopolitical landscape, they accelerate the other risks that we face,” the report said.
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Economy
Opinion: Canada's economy has stagnated despite Trudeau government spin – Financial Post
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Growth in gross domestic product (GDP), the total value of all goods and services produced in the economy annually, is one of the most frequently cited indicators of economic performance. To assess Canadian living standards and the current health of the economy, journalists, politicians and analysts often compare Canada’s GDP growth to growth in other countries or in Canada’s past. But GDP is misleading as a measure of living standards when population growth rates vary greatly across countries or over time.
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Federal Finance Minister Chrystia Freeland recently boasted that Canada had experienced the “strongest economic growth in the G7” in 2022. In this she echoes then-prime minister Stephen Harper, who said in 2015 that Canada’s GDP growth was “head and shoulders above all our G7 partners over the long term.”
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Unfortunately, such statements do more to obscure public understanding of Canada’s economic performance than enlighten it. Lately, our aggregate GDP growth has been driven primarily by population and labour force growth, not productivity improvements. It is not mainly the result of Canadians becoming better at producing goods and services and thus generating more real income for their families. Instead, it is a result of there simply being more people working. That increases the total amount of goods and services produced but doesn’t translate into increased living standards.
Let’s look at the numbers. From 2000 to 2023 Canada’s annual average growth in real (i.e., inflation-adjusted) GDP growth was the second highest in the G7 at 1.8 per cent, just behind the United States at 1.9 per cent. That sounds good — until you adjust for population. Then a completely different story emerges.
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Over the same period, the growth rate of Canada’s real per person GDP (0.7 per cent) was meaningfully worse than the G7 average (1.0 per cent). The gap with the U.S. (1.2 per cent) was even larger. Only Italy performed worse than Canada.
Why the inversion of results from good to bad? Because Canada has had by far the fastest population growth rate in the G7, an average of 1.1 per cent per year — more than twice the 0.5 per cent experienced in the G7 as a whole. In aggregate, Canada’s population increased by 29.8 per cent during this period, compared to just 11.5 per cent in the entire G7.
Starting in 2016, sharply higher rates of immigration have led to a pronounced increase in Canada’s population growth. This increase has obscured historically weak economic growth per person over the same period. From 2015 to 2023, under the Trudeau government, real per person economic growth averaged just 0.3 per cent. That compares with 0.8 per cent annually under Brian Mulroney, 2.4 per cent under Jean Chrétien and 2.0 per cent under Paul Martin.
Recommended from Editorial
Canada is neither leading the G7 nor doing well in historical terms when it comes to economic growth measures that make simple adjustments for our rapidly growing population. In reality, we’ve become a growth laggard and our living standards have largely stagnated for the better part of a decade.
Ben Eisen, Milagros Palacios and Lawrence Schembri are analysts at the Fraser Institute.
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