In January 2019, ahead of Davos summit, the World Economic Forum says reduced government collaboration weakens the ability to head off a possible recession trade and business risks may worsen. Every year at Swiss ski resort of Davos world leaders meet for the World Economic Forum. None of the world leaders could have missed the increasing number of alarm bells ringing at the beginning of 2019. Reputable economists warning that the 10 years of global growth since the trauma of the 2008 Lehman Brothers triggered financial crisis was running out of steam. Global economic growth is forecast to remain a respectable 3.6% in 2019, but global economic growth is likely to slow to 3% in 2020 as headwinds increase and problems mount. In 2019, global economic growth will be affected by:
- United States trade war with China
- Slowing growth in European Union
- Increasing political instability in many countries
These combined problems will undermine confidence in many areas of business. But, shipping business will affected deeply. Despite low newbuilding orders at the shipyards and an improving supply-demand balance freight rates in many segments consistently under-perform. In January 2019, World Economic Forum’s own annual report was published. That report summarizes the trading risks the world faces. World Economic Forum’s annual report conducts survey of around 1,000 experts and decision-makers presented a picture of weakening international collaboration that is undermining the collective will to tackle the problems facing business. To sum it up, global risks are intensifying. World Economic Forum’s annual report concluded that global risks of many types are intensifying but the ability to overcome global risks is lacking. President of the World Economic Forum Borge Brende stated that the world would have to face up to how it intended to deal with the next recession, which would be along sooner rather than later. Borge Brende explained that the risks facing business were increasingly complex and inter-related. Nevertheless, as the world fractured and turned towards national politics, the ability to deal with those risks was decreasing. According to Borge Brende, slowing growth, increasing debt, trade tensions and mounting inequality were daunting challenges that would need a world collaborative approach to solve. According to the World Economic Forum poll, extreme weather events were the most likely risk for business, with the failure of climate-change mitigation and adaptation not far behind. According to Zurich Insurance’s CRO Alison Martin, in order to respond to climate change would require a significant increase in infrastructure spending, by up to $1 trillion per year up to 2040. Alison Martin stated that demands on shipping to slash carbon emissions by investment in new fuels is just one element of the huge challenges the world faces.