AGENCIES

January 12: The cost-of-living crisis will become the biggest global risk over the next two years, warned a survey conducted by the World Economic Forum (WEF).

According to the AFP, the WEF report described the cost-of-living crisis as the "biggest short-term risk" between now and 2025, followed by natural disasters, extreme weather events and "geo-economic confrontation".

Global inflation remains at sky-high levels after energy and food costs rocketed last year, largely owing to the invasion of agricultural powerhouse Ukraine by major oil and gas producer Russia, added the AFP news report.

Consumer price inflation in Nepal rose to 8.08 percent in the first four months of the current fiscal year compared to 6.04 percent a year ago, according to the latest report of Nepal Rastra Bank.

Supply constraints caused by the Covid-19 pandemic have also contributed to decades-high prices for consumers.

According to the study report of WEF, conflict and geo-economic tensions have triggered a series of deeply interconnected global risks.

The risks include energy and food supply crunches, which are likely to persist for the next two years, and strong increases in the cost-of-living and debt servicing, the report added.

According to AFP, the survey, produced with the consulting firm Marsh McLennan and Zurich Insurance Group, took into account the views of more than 1,200 global risk experts, policymakers and industry leaders.

"The short-term risk landscape is dominated by energy, food, debt and disasters," AFP quoted Saadia Zahidi, a managing director at WEF, as saying.

"Those that are already the most vulnerable are suffering -- and in the face of multiple crises, those who qualify as vulnerable are rapidly expanding, in rich and poor countries," she wrote in the report.

The respondents of the survey considered traditional warfare as less of a risk than geo-economic conflict -- such as sanctions, punitive tariffs and other forms of trade war -- or cyber warfare.

The WEF study called on leaders to act "collectively and decisively, balancing short- and long-term views" and it concluded on the need for cooperation to strengthen "financial stability, technology governance, economic development and investment in research, science, education and health," AFP added.

According to the news agency, Carolina Klint, a risk management leader at Marsh, said this year would be marked by "increased risks" related to food, energy, raw materials and cyber security that could further disrupt global supply chains and impact investment decisions.

Many analysts warn that the global economy will suffer a recession in 2023 as inflation remains elevated.

According to the World Bank’s latest report, global growth is projected to slow to its third-weakest pace in nearly three decades, overshadowed only by the 2009 and 2020 global recessions.

Global Economic Prospect Report of the World Bank published on Tuesday states that the global economic growth rate would be squeezed to 1.7 percent in the year 2023 which is 1.3 percentage points lower than the earlier estimate. 

Nepal’s economic growth rate would remain at 5.1 percent in the current fiscal year and 4.9 percent in FY 2023/24, according to the WB report.