The Davos Forum adds an additional challenge for Spain in 2023 in light of the “proliferation of illegal economic activities”
Neither the wounds of the pandemic, nor the war in Ukraine, nor the risk of a recession. Inflation and the increase in the cost of living for households have emerged as the main short-term economic risk this year. This is according to the report ‘The Global Risks Report 2023’ published this Wednesday by the World Economic Forum (Davos Forum), which brings together world economic and business leaders in Switzerland next week.
The rise in energy and food prices and their impact on consumers’ wallets has been classified as the biggest risk for the next two years, with inflationary pressures already “disproportionately high” according to the survey used to prepare the document. ” has been hit. the most vulnerable.
The challenges facing the global economy are also more interconnected than ever. And it is that while inflation is the main challenge identified, the threat posed by factors such as restrictions on energy and food exports or the relaxation of China’s ‘covid zero’ policy also contributes to this, “which on the will test the resilience of global supply chains.”
If high inflation continues, central banks will be forced to maintain their policy of rate hikes, something that would “increase the risk of over-indebtedness and recession and create a vicious circle for fiscal planning”. And it is that, despite some improvements following the increased spending to deal with the pandemic, household and corporate debt remains dangerously high in an environment of rising interest rates. “If the trajectory does not change, vulnerable countries could end up in a permanent crisis,” they warn.
The report also points out that the continuation of a global cost-of-living crisis could lead to increased social discontent, especially among the most vulnerable, given the difficulties in accessing products and services to meet their basic needs. foreseen, “feed the turmoil and instability.
The Davos Forum confirms that the higher costs of food, energy and also housing, together with lower purchasing power, have already forced families to adjust their budgets, eliminating essential expenditures and improving the quality of health and the well-being of the population is deteriorating. the communities.
The document also warns that this crisis, together with other factors such as increased military spending due to geopolitical tensions, could distract from other priority objectives, such as the fight against climate change, which remains the main global economic risk in the long term (decade).
In the specific case of Spain, the risks detected have changed significantly compared to 2022. Unemployment in particular was the main concern last year, followed by the economic slowdown, indebtedness and the internal rift between the Autonomous Communities.
Faced with this view, the main risk in the new report for 2023 is inflation, followed by the high level of debt (which rises one position compared to the previous year) and the loss of purchasing power. Unemployment is at the same level, followed in fifth place by what they call “geopolitical risk from the resource dispute.”
In other words, apart from the relationships between the different autonomy, the challenge now is how to deal with the distribution of resources between them. The report adds an additional risk for Spain: the “proliferation of illegal economic activities”.
Source: La Verdad
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
