- POSTED: 16 Jan 2014 20:44
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The growing gulf between the rich and the poor represents the biggest global risk this year, the World Economic Forum declared on Thursday ahead of this month's Davos summit.
LONDON: The growing gulf between the rich and the poor represents the biggest global risk this year, the World Economic Forum declared on Thursday ahead of this month's Davos summit.
The institution issued the gloomy warning in its annual Global Risks survey, published before its annual get-together of decision-makers at the Swiss mountain resort of Davos from January 22-25.
"The chronic gap between the incomes of the richest and poorest citizens is seen as the risk that is most likely to cause serious damage globally in the coming decade," the WEF concluded.
In its Global Risks 2014 report, which is based on a survey of more than 700 experts from industry, government, academia and civil society, the WEF outlined possible events that could damage the world economy this year.
After income disparity, the next most likely risk that could cause systemic shock across the globe was extreme weather, followed by unemployment and underemployment, climate change, and cyber attacks.
The WEF added that the global risk that was of "highest concern" to respondents was the potential for more fiscal crises, in the wake of the eurozone debt drama.
"Economic, societal and environmental risks dominate the list of global risks that the respondents are most concerned about, with fiscal crises emerging as the top issue," the WEF said.
"Despite the efforts of many eurozone countries to control their deficit and debt levels, concerns regarding fiscal crises persist.
"They are also fuelled by the high levels of public debt in Japan and the US, where political gridlock has exacerbated perceptions.
"Fiscal crises can severely affect the stability of the global economy," it warned.
In addition, the WEF also cautioned about the potential for profound political and social instability.
There was a possibility of the failure of a major financial mechanism or institution that could spark fresh mayhem on world financial markets.
"Five years after the collapse of Lehman Brothers, with its system-wide impacts, the failure of a major financial mechanism or institution also features among the risks that the respondents are most concerned about, as uncertainty about the quality of many banks' assets remains," the report read.