Rising income inequality is seen as the top risk for the global economy in 2017, with reforms to market capitalism increasingly viewed as necessary to ward off a populist backlash, the World Economic Forum said Wednesday.
A survey for the WEF’s Global Risks Report, published a week before the group’s annual gathering of the world’s business and political elites in the luxury Swiss ski resort of Davos, said experts believe rising income and wealth disparity will be the most important trend in determining global developments over the next 10 years.
“This points to the need for reviving economic growth, but the growing mood of anti-establishment populism suggests we may have passed the stage where this alone would remedy fractures in society: reforming market capitalism must also be added to the agenda,” said the report.
WEF experts viewed with particular concern the weak recovery from the global economic crisis a decade ago that has left more people unemployed or underemployed.
Noting the electoral surprises of 2016 and emergence into the mainstream of parties stressing national sovereignty and traditional values across Europe and beyond, survey respondents also ranked increasing polarisation and intensifying national sentiment among the top five risks to the global economy.
The report also pointed to rapid changes in social attitudes that meant many voters were feeling left behind in their own countries, undermining social and political cohesion.
“Years of building pressure in many parts of the world, at least since the global financial crisis, crystallised into dramatic political results during 2016 as public disaffection with the status quo gained traction,” the report said, pointing to Britain’s vote to leave the European Union and the election of political outsider Donald Trump as US president.
It warned the implications of such results are potentially far-reaching, with some people questioning whether the West has reached a tipping point and might now embark on a period of deglobalisation.
WEF founder and executive chairman Klaus Schwab told AFP earlier this week he hoped this year’s gathering could brainstorm about how to address “the root causes” of the widespread anxiety seen in the world today and answer the question “why the people are angry, and why they are not satisfied.”
Some 750 experts from business, academia, civil society and government across the world were surveyed for the report.