​Inflation, debt crisis biggest threats for Bangladesh in next 2 years: WEF

Rapid inflation, debt crisis, severe commodity price shocks, human-made environmental damage, and geopolitical contestation of resources are the top five risks for Bangladesh over the next two years, says the World Economic Forum's latest Global Risks Report.

The World Economic Forum's top business executives have identified managing inflation as a worldwide concern while terming "rapid and/or sustained inflation" Risk 1 for 33 out of 121 economies surveyed for the next two years.

It was also highlighted as a top-five risk over the next two years in 89 of the countries surveyed in the EOS, a significant increase from 2021.

"Risk 1" indicates the most frequently selected risk in each economy.

"The inflation that we have seen due to the commodity price spike, and the support given in advanced economies to keep businesses afloat, it wasn't perfect. Things look grim in the advanced economies, with fears of recession. But many small businesses and people stayed afloat," said Saadia Zahidi, managing director of the WEF.

Most respondents to the 2022-2023 Global Risks Perception Survey (GRPS) chose "energy supply crisis"; "cost-of-living crisis"; "rising inflation"; "food supply crisis" and "cyberattacks on critical infrastructure" as among the top risks for 2023 with the greatest potential impact on a global scale. 

Globally, the cost of living crisis is the biggest short-term risk while the failure of climate mitigation and climate adaptation is the largest long-term concern. 

In this year's GRPS, more than four in five respondents anticipated consistent volatility across economies and industries with multiple shocks accentuating divergent trajectories over the next two years.

These 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. At the same time, these crises risk undermining efforts to tackle longer-term risks, notably those related to climate change, biodiversity, and investment in human capital.

These are the findings of the Global Risks Report 2023, released today, which argues that the window for action on the most serious long-term threats is closing rapidly and concerted, collective action is needed before risks reach a tipping point.

Top risks for South Asia

South Asian countries may face a number of risks in the future and the top risks for them are not common.

Digital inequality is the biggest risk identified for India, geopolitical contestation of resources for Nepal, digital power concentration for Pakistan, and debt crises for Sri Lanka, while in Bangladesh the biggest threat is rapid inflation.

Sri Lanka's recent crisis provides a very real example of the spiraling risks to human security and health that can arise from economic distress, where a debt default and shortage in foreign currency limited imports; disrupted access to food, fuel, healthcare, and electricity; and led to violent protests and the resignation of the President.

"The short-term risk landscape is dominated by energy, food, debt, and disasters. 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 alike," said Saadia Zahidi.

"In this already toxic mix of known and rising global risks, a new shock event, from a new military conflict to a new virus, could become unmanageable," said Zahidi.

She added, "Climate and human development therefore must be at the core of concerns of global leaders to boost resilience against future shocks."

Last year's Global Risks Report warned that a divergent economic recovery from the Covid-19 pandemic risked deepening divisions at a time when collaboration was urgently required to address looming global challenges.

A list of 35 risks that were incorporated into the World Economic Forum's 2022 Executive Opinion Survey (EOS), which was administered between April and September 2022.

Over 12,000 respondents were presented with the following question: "Which five risks are the most likely to pose the biggest threat to your country in the next two years?" and were asked to select these from a list of 35 risks.