Global risks which are poised to have inevitable strains on procurement have been raised in the World Economic Forum’s (WEF) Global Risks Report 2023.
The report states, “a set of risks that feel both wholly new and eerily familiar” are on the cards dominated by cost of living in the next two years and climate action failure.
The report outlines four potential futures centred around food, water and metals and mineral shortages.
“Governments and central banks could face stubborn inflationary pressures over the next two years, not least given the potential for a prolonged war in Ukraine, continued bottlenecks from a lingering pandemic, and economic warfare spurring supply chain decoupling,” the report states.
The report speaks of widespread debt or “stagflation”.
“Continued supply-driven inflation could lead to stagflation, the socioeconomic consequences of which could be severe, given an unprecedented interaction with historically high levels of public debt,” said the WEF.
Competition for resources raises potential danger of “resource autarkies” where countries become economic systems of self-sufficiency and limited trade.
“Distrust drives a push for self-sufficiency in high-income countries, limiting the need for rivalry over food and water to a degree, but widening divides between countries,” says the report.
The report suggests state intervention is the “resource most exposed to a concentration in supply – critical metals and minerals” but ultimately this could lead to supply shortages and wars over pricing.
The top 10 risks
“Resource power shifts, driving the formation of new blocs as well as wedges in existing alliances between mineral-rich and -poor countries, while the potential for accidental or intentional conflict escalates,” says the report.
Countries which can afford the current pressures are “cushioning” such impacts, but the report claims the same is not said for lower-income countries which may face debt, climate change and food security issues.
“Continued supply-side pressures risk turning the current cost-of-living crisis into a wider humanitarian crisis within the next two years in many import-dependent markets,” says the report.
Download a copy of the WEF Global Risks report.
