World Economic Forum’s ‘Global Risks Report 2020’ and UN’s ‘Global Economic Prospects’ claim extreme weather and loss in biodiversity will disrupt the global economy
Climate change is the biggest threat the planet will face in the next decade, in part because extreme weather and loss in biodiversity will disrupt the global economy, two new reports have said.
While the World Economic Forum made the dire prediction in its The Global Risks Report 2020 released on January 15, 2020, the United Nations (UN) confirmed the same in its ‘Global Economic Prospects’ report on January 16, 2020.
The climate crisis has been a major risk factor behind the slow down in global economic growth in 2019, the UN report said.
Global Gross Domestic Product growth slipped to 2.3 per cent last year, causing global trade growth to slow to 0.3 per cent. The figures capped the worst global economic performance in the last decade, the report added.
“Climatic catastrophic shocks” will continue to be a major risk for the world economy in 2020, according to the report. Other risks include trade conflicts, rising geopolitical tensions and increasing debt levels.
According to the World Meteorological Organization, “2020 has started out where 2019 left off — with high impact weather and climate related events”.
India too is vulnerable to such risks
According to the UN report, an overdependence on domestic consumption or exports to drive economic growth has left many countries in the South Asian region, including India, vulnerable to shocks.
In India, the rate of economic expansion fell sharply from 6.8 per cent in 2018 to 5.7 per cent in 2019 due to reduced investment, subdued consumer sentiment, weak manufacturing and services growth.
The Indian economy may gain some momentum with 6.6 per cent growth in 2020, the report said.
But it also cautioned that with a reduction in consumer demand, it will take several years for growth rates to return to their previous levels in the country. The recently leaked National Sample Survey Office data is an evidence of the declining demand in monthly spending that fell by nearly 3.2 per cent between 2011-12 and 2017-18.
Government deficit is expected to widen in the coming years and this is expected to restrict spending on infrastructure, social security and other important priorities for India’s long-term development growth.
At the same time, climate change will be the principal “long-term risk” for India and its economy, the UN report warned.
Extreme natural disasters like flooding which account for maximum economic losses, are expected to increase in frequency in South Asia, the report projected.
This seems to be true considering the recent trend, when the loss due to floods in India has been on the rise.
In 2019, extreme flooding due to extreme rainfall caused human deaths and significant damage to property in the country, the India Meteorological Department confirmed.
The country recorded a loss of Rs 95,736 crore in 2018 due to floods. This was 2.6 times more than the financial loss due to floods in 2017, according to government data presented in the Rajya Sabha.
Curtailing climate change is critical
If the world manages to keep these risks under check, the global GDP can grow marginally to 2.5 per cent, from a decade-low of 2.3 per cent in 2019. But if the world fails to address them, GDP growth is projected to be down to around 1.8 per cent, the UN has warned.
A slowdown in global economic growth would have a serious impact on global and national efforts required to meet sustainable development goals.
“These risks could inflict severe and long-lasting damage on development prospects. They also threaten to encourage a further rise in inward-looking policies, at a point when global cooperation is paramount,” António Guterres, secretary-general of the UN, said in a statement.
The UN has called for abandoning fossil fuel subsidies and ending investment in and construction of coal-fired power plants by 2020.
It has advised the world to move towards a low-carbon, clean economy, with a strategic approach for ensuring widened access to energy that is clean, reliable and yet affordable.
Text by Kiran Pandey
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