As we properly head into 2021, we thought it would be a good time to examine some of the key economic risks that the world faces this year. Some are longer-term and far-reaching while others may soon subside or never materialize.
A Global Food Crisis
Unfortunately, it seems that this risk may already be unfolding as the UN predicts that we are about to witness the greatest global food crisis in 50 years due to COVID-19 supply chain disruptions. Even more alarmingly, UN figures indicate that more people will die of COVID-19 related malnutrition than of the virus itself. Parts of Africa, South America, and the Middle East are at particularly high risk.
Low Oil Prices Ravage Middle Eastern Economies
Due to reduced demand and increased supply, oil prices may remain depressed for some time to come. This will have a significant economic impact on oil-dependent economies in the Middle East and North Africa. However, some economies will work to adapt and diversify and this may lead to more trade opportunities in the region.
A Cyber Black Swan Event
As more and more of the world relies on the internet and digital technology, a global cyberattack or the occurrence of rare natural phenomena, such as solar storms, could take down the internet and send the global economy reeling. With the potential booties from cyberattacks only increasing in value, criminals are choosing to work from home too.
Another GFC Driven by COVID-19 Debt
Emergency spending has sent government debt skyrocketing in the wake of the pandemic. Worldwide debt rose by more than 15 trillion US dollars in 2020. All this unchecked debt will likely come back to bite at some point and could trigger another global financial crisis, especially if governments insist on continuing draconian pandemic measures.
US-China Flare-up Over Taiwan
Taiwan is a hotspot for US-China tensions and the two regularly engage in military displays, creating a volatile situation that could erupt at any moment. Having said that, this has generally been the status quo ever since tensions began. Thus, while outright conflict is unlikely, the situation is incredibly strained and any flare-up could hurt global supply chains and send shock waves throughout the world economy.
Vaccines Become a Disaster
The slow rollout or outright failure of the global COVID-19 vaccination drive could send the world’s economy into a depression, leaving us with more economic chaos than anyone would like to imagine.
