A prolonged recession is the greatest risk from the COVID-19 pandemic, according to a new survey of nearly 350 risk managers by the World Economic Forum (WEF).
The WEF said that the Great Lockdown will be followed by the Great Transformation, as a series of profound changes will transform the global economy.
In WEF’s view, in their view, this crisis presents leaders with a pivotal moment to seize the opportunity to shape a better new normal.
A drawn out recession topped the list of the Top Ten risks.
Economies such as that of Germany, the largest in the European Union and along with the rest of Eurozone, Japan and South Korea have either contracted during the first quarter or are officially in recession.
Economic risks are regarded as the most challenging fallout from the pandemic by the managers surveyed.
A prolonged global recession as a wave of lockdowns are implemented due to surges in coronavirus cases as economies re-open tops the list of most feared risks, closely followed by bankruptcy, industry consolidation, failure of industries to recover and a disruption of supply chains.
Alongside this, geopolitical disruption to business, in the form of protectionist policies that exploit COVID-19 to restrict the movement of people and goods, is another major risk.
The risk managers also fear another infectious disease outbreak, an increase in cybercrime and the breakdown of IT infrastructure and networks.
The WEF notes that half a billion people are at risk of falling into poverty as global trade volumes shrink by between 13% to 32% in 2020.
This will result in foreign direct investment falling by between 30% to 40%.
There will also be an impact on the development of human capital as some 80% of learners globally were not in school in March.
Despite this pessimistic backdrop, the WEF remains optimistic about the future as it says decisive and bold action could bring the global economy back from the brink. Even though at this stage, it is hard to imagine the many positive signs emerging from the pandemic,
One of them is a new-found understanding and appreciation for essential public services, most notably health, but also education, care for both children and the elderly and social safety nets, such as grants in South Africa’s case.
WEF notes that the solidarity and compassion that individuals have shown one another bodes well for the degree of collaboration that will be needed between civil society and the public and private sectors to effect positive change.
It cites as an example the overwhelming response in the United Kingdom to the call for retired health care professionals to help with the health crisis, even as they are at heightened risks themselves.
The WEF noted that behavioural change resulting from widespread lockdowns suggests support for, and interest in, more sustainable consumption and mobility habits, which was evidenced in the doubling of American bicycle sales in March compared with a year ago.
This, alongside the implementation of green stimulus programmes, has the potential to fundamentally change the way in which industries, economies and societies operate and so address climate change.
The Great Transformation will also accelerate the move to the Fourth Industrial Revolution as businesses embrace digital operating models, while an extended period of homeworking and schooling has provided leaders insight into the benefits offered by more technologically-enhanced ways of learning, working and producing, from telemedicine and logistics to the knowledge economy.
(Compiled by Inside Politics staff)