New Report Identifies Top Threats To Global Economy

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In a report published today, February 28, The Economist Intelligence Unit (EIU) released a list of the top ten biggest risks to the economic and political order worldwide.

The list shows that even though high risk periods have been observed in the past, what makes this different are “the risks associated with the US questioning its role in the world at the same time as China is becoming more assertive.” Worldwide risks don’t just involve the two largest economies, but indeed cross over into the military, financial and political arenas.

 

The top two on the list are an extended fall in crucial stock markets as this could destabilize the economy all over the world, as well as a trade war that could be sparked by protectionism by the United States.

There are three risks that are tied for the next spot on the list. These are a serious cyberattack that could devastate government and business initiatives, an eruption of conflict over territorial rights in the South China Sea, and the possibility of worldwide growth surpassing the 4 percent mark.

Rounding out the top ten are the possibility of China suffering a lengthy economic downturn, significant military action in Korea, hostilities in the Middle East between Saudi Arabia and Iran, a drop in oil prices if the OPEC agreement to lessen oil production comes to a halt, and the withdrawal of several countries from the euro zone.

The Risk Practice Director for The Economist Intelligence Unit, Philip Walker, says, “There has arguably never been a period of such robust economic growth, low inflation and high employment that has been coupled with such a prevailing sense of unease with global conditions. Policymakers, companies and populations are facing a wide range of major threats that could well upset the traditional global order in the coming years. It is important to assess and prepare for a likely tumultuous global environment in order not just to mitigate damage, but also take advantage of opportunities that will undoubtedly arise along the way.”

The EIU Report, which can be found at  www.eiu.com/top-10-global-risks, shows at length how each of the risks could become threats that could gravely affect the stability of different regions in the world. Every risk is also ranked in the light of how likely it is to occur as well as how it could effect the economy worldwide. It allows for a difference to be made between events that have a low probability of occurrence but would have great impact (“black swan”) and risks that are more likely and therefore need extensive preparation for.