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Political issues 'major threat to global growth'

Geneva, September 3, 2007

Political pressures present the greatest medium-term threat to global growth, according to a report released today by the World Economic Forum’s Global Risk Network.

While global vulnerability to a US economic downturn is a major concern, continued economic expansion for the next 10 years hinges on management of political, rather than economic, challenges. These are among the findings in Global Growth@Risk, a report published by the Global Risk Network in collaboration with PricewaterhouseCoopers.

'Decision-makers can't assume that tomorrow's growth story will read like today's,” said Jesse Fahnestock, a Global Leadership Fellow of the Forum’s Global Risks Programme. “The economic fundamentals are there, but political dynamics are more likely to write the next chapter.'

Major issues likely to put growth at risk range from geopolitical – including the struggle for energy resources and management of a new global power order – to local challenges such as management of pollution and environmental stresses. Managing the gains from growth – and the potential for rising inequalities – is the primary socio-political risk to continued global growth.

The report surveyed more than 30 experts from business, academia and government, asking them to consider the major issues and risks affecting the regions, industries and companies at the forefront of economic growth. Their responses stress the political necessities that are emerging in many countries and the regulatory and diplomatic responses they would require. While new regulations are seen as necessary to sustain growth in the long term, there is concern that over-regulation could slow growth unnecessarily or, conversely, that failure to regulate could fuel a populist backlash against global business.

While politics is a primary concern, the report also identifies the reliance on American consumption as the key vulnerability of the global economy. While consumer markets elsewhere appear to be developing rapidly, the ability of Asian manufacturing and global commodity production to withstand a downturn in the US remains in doubt.

Published to coincide with the launch of the World Economic Forum’s Community of Global Growth Companies at the Inaugural Annual Meeting of the New Champions in Dalian, People’s Republic of China, the report features a series of CEO Perspectives, wherein chief executives of high-growth and globally expanding corporations consider issues from the perspective of their business. This series of interviews was conducted in collaboration with PricewaterhouseCoopers.

The report also looks at China’s growth challenges, themselves a microcosm of the Global Growth@Risk paradigm. As such, China’s ability to usher in an era of harmonious growth may be closely tied to the prospects of sustainable global growth, it said. - TradeArabia News Service


 




Tags: World Economic Forum | Global growth | political |

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