Rising inequality among biggest global risks: WEF

 A sign of the World Economic Forum (WEF) at its headquarters in Cologny near Geneva.
A sign of the World Economic Forum (WEF) at its headquarters in Cologny near Geneva.PHOTO: AFP

Forum also flags climate change and social polarisation as major trends in next decade

LONDON • Rising inequality and social polarisation are set to shape world developments for the next decade after contributing to Britain's decision to leave the European Union and the ballot-box success of Mr Donald Trump, the World Economic Forum (WEF) said yesterday.

Climate change was underlined as the third major global trend in the WEF's annual assessment of global risks, released at an event at Bloomberg's European headquarters in London.

The report will be discussed at the WEF's annual gathering of political and business leaders in Davos, Switzerland, beginning on Jan 17.

A weak economic recovery following the global financial crisis has widened the gap between rich and poor, fuelling a sense of "economic malaise" that has led to the rise of populist parties, the report said. While Brexit and Mr Trump were the highest-profile signs of an anti-establishment backlash in Western democracies, the evidence extends far wider, with support growing for far-right parties in Germany, France, Italy and the Netherlands, among others.

The poll involved 750 experts assessing 30 global risks ranging from deflation to extreme weather events and cyber attacks. They identified trends such as an ageing population, climate change, social polarisation and income inequality as amplifying those risks.

The WEF ranked risks by impact and likelihood. While weapons of mass destruction were deemed the most impactful risk, they were also judged unlikely. Extreme weather events were the next most impactful, and were also rated the most likely risk.

The next four most likely risks were large-scale involuntary migration, major natural disasters, large-scale terror attacks and a big incident of data theft or fraud.

Rising income inequality was identified as the most important underlying trend determining global events, followed by climate change and societal polarisation.

The report's authors pointed to a "deteriorating commitment to global cooperation", with China rejecting the verdict of an international tribunal over disputed waters in the South China Sea. In addition, Mr Trump has said he is considering pulling the US out of the Paris Agreement, the first truly global deal to combat climate change.

The WEF urged the creation of new policies to help more people benefit from new technologies. It examined 12 emerging technologies, ranging from 3D printing to renewable energy.

Advances in artificial intelligence and robotics yielded the greatest potential benefits, but also the biggest potential negative effects, it said.

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A version of this article appeared in the print edition of The Straits Times on January 12, 2017, with the headline 'Rising inequality among biggest global risks: WEF'. Print Edition | Subscribe