Environment the biggest worry for global leaders in gloomy report from WEF

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Extreme weather events — what the WEF called “billion dollar disasters” — were seen as the single most prominent risk. (Reuters)
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Klaus Schwab, the World Economic Forum’s founder and executive chairman, said that the widening economic recovery presents an opportunity to “tackle the fractures that we have allowed to weaken the world’s institutions, societies and environment.” (Reuters)
Updated 22 January 2018
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Environment the biggest worry for global leaders in gloomy report from WEF

Global business leaders and policymakers are more worried about environmental issues than any other risk factor in 2018, according to a report by the World Economic Forum (WEF).
The report, which is published each January ahead of the WEF’s annual meeting in Davos, Switzerland, said that the world is “struggling to keep up with the pace of change.” For the second year running, environmental shocks are the main concern for global experts and decision makers.
The report “highlights numerous areas where we are pushing systems to the brink, from extinction-level rates of biodiversity loss to mounting concerns about the possibility of new wars,” the WEF said.
Experts were asked to rank 30 global risks in terms of impact and likelihood. All five environmental risks — extreme weather; biodiversity loss and ecosystem collapse; major natural disasters; man-made environmental disasters; and failure of climate-change mitigation and adaptation — were responders’ biggest concerns. Extreme weather events — what the WEF called “billion dollar disasters” — were seen as the single most prominent risk.
In the Middle East, however, other risks were seen as more threatening. The report highlighted fiscal crisis as the biggest threat to stability, followed by energy price shocks, unemployment, terrorist attacks and inter-state conflict. The environment did not feature in the top five risks for regional leaders.
Environmental issues are sure to feature prominently at this year’s meeting in Davos, with the presence of US President Donald Trump, a renowned skeptic on climate change, guaranteed to generate debate on the matter.
World leaders are also generally more pessimistic about the state of global affairs. Of 1,000 surveyed by the WEF, some 59 percent said that risks would increase in 2018, with only 7 percent believing that the world would be less risky.
A deteriorating geopolitical landscape is partly to blame for the pessimistic outlook in 2018, with 93 percent of respondents saying they expect political or economic confrontations between major powers to worsen and nearly 80 percent expecting an increase in risks associated with war involving major powers, the report added.
“There are numerous other potential flashpoints around the world, not least in the Middle East, where an increasing number of destabilizing forces might lead to the eruption of new military conflicts in addition to those in Syria and Yemen,” the report said.
Global economic growth is forecast to be strong in 2018, reducing the risk from economic factors. Some experts were worried that the improvement in global GDP growth rates may lead to complacency about persistent structural risks in the global economic and financial systems.
Even so, inequality is ranked high among the underlying risk drivers, and the most frequently cited interconnection of risks is that between adverse consequences of technological advances and high structural unemployment or under-employment, the report said.
Klaus Schwab, the WEF’s founder and executive chairman, said: “A widening economic recovery presents us with an opportunity that we cannot afford to squander, to tackle the fractures that we have allowed to weaken the world’s institutions, societies and environment. We must take seriously the risk of a global systems breakdown. Together we have the resources and the new scientific and technological knowledge to prevent this. Above all, the challenge is to find the will and momentum to work together for a shared future.”
Cyber threats are growing in prominence, with large-scale cyberattacks now ranked third in terms of likelihood, while rising cyber-dependency is ranked as the second most significant driver shaping the global risks landscape over the next 10 years, the report concluded.
John Drzik, president of global risk and digital at Marsh & McLennan insurance group, which sponsors the report, said: “Geopolitical friction is contributing to a surge in the scale and sophistication of cyber-attacks. At the same time cyber exposure is growing as firms are becoming more dependent on technology.”


India names Modi demonetization backer as cenbank head

Visitors are seen standing next to a logo of the Reserve Bank of India (RBI) at the bank's head office in Mumbai on December 5, 2018. (AFP)
Updated 12 December 2018
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India names Modi demonetization backer as cenbank head

  • Das — a high-profile backer of Modi’s controversial 2016 move to scrap high-value currency notes, known as demonetization

MUMBAI: Ex-finance ministry official Shaktikanta Das took charge of the Reserve Bank of India on Tuesday, in a swift appointment expected to ease a dispute with the government as it pushes for looser credit rules ahead of a general election.
The announcement by Prime Minister Narendra Modi’s administration came just a day after Urjit Patel resigned from the post, following months of clashes between the two institutions over lending curbs and how to deploy the central bank’s surplus reserves.
Pressure on the RBI to take immediate steps to boost the economy, including a transfer of the excess reserves to the government, could well rise after Modi’s ruling Bharatiya Janata Party (BJP) suffered likely election losses in three key states on Tuesday.
Das — a high-profile backer of Modi’s controversial 2016 move to scrap high-value currency notes, known as demonetization — will serve a three-year term as governor, effective immediately.
RBI watchers said they expected the 61-year-old, who retired last year as secretary of the department of economic affairs having previously served on the RBI’s board, to put relations between the Mumbai-based bank and the finance ministry in New Delhi on a stabler footing.
Investors will also look closely at his ability to hold up against outside influences after recent efforts by the Modi government to gain greater control over the central bank’s regulatory powers.
“The incoming governor will have to work hard to prove that he has his own independent mind,” said Deepak Jasani, head of retail research at Hdfc Securities.
Investors said any openly political appointee with little macro-economic experience, would not sit well with financial markets that already sold off following the BJP’s election setbacks.
But Ashish Vaidya, executive director and head of trading at DBS Bank in Mumbai, said he expected India’s debt and currency markets to react positively.
“He is a bureaucrat...We expect the RBI to take a pragmatic approach under him, be pro-growth and change its stance going ahead given that inflation has come off sharply,” he said.
Finance Minister Arun Jaitley told Reuters partner ANI that the government acknowledged the bank’s independence.
“Government will fully support the RBI and coordinate with it in areas where consultations of government are required to make sure India’s economy benefits from both government policy decisions and areas which fall within domain of the RBI,” ANI tweeted, quoting Jaitley.

SWIFT APPOINTMENT
Pronab Sen, India’s former chief statistician, said he was surprised by the speed of Das’s appointment.
“If you have a situation where a position as important as the governor of the RBI is filled within 24 hours of the resignation of the incumbent, that will raise eyebrows,” Sen told Reuters.
“People are going to say, clearly this guy had already been identified. And, the situation was created where Urjit Patel had to quit.”
Das — widely seen as a contender for the top RBI job after Raghuram Rajan’s term ended in 2016 — did not answer calls from Reuters to his mobile phone.
RBI officials who have worked with him closely said Das was likely to be more inclusive in the decision-making process than Patel.
“He has a balanced approach and is good at consensus building,” said a former deputy governor. .”..We have had our fair share of differences. But he has always been solution-centric rather than festering on those differences.”
Das worked in the finance ministry under both Modi’s government and the previous coalition led by the main opposition Congress party and was also involved in drafting the Insolvency and Bankruptcy code aimed at protecting small investors.
He came under fire for his pro-demonetization stance and was the most vocal bureaucrat at the time Modi withdrew the high-value bank notes to fight tax evasion.
Das last year criticized the methodology of global rating agencies and sought a sovereign rating upgrade for India.