Confidence in global economy grows along with fear of disruption
FEAR of major global economic disruption, such as a financial market credit squeeze, receded in the second quarter compared to the first quarter, the World Economic Forum (WEF) and the Global Agenda Council (GAC) said this week.
According to a survey, the Global Confidence Index (GCI) - a joint initiative of the two organisations - the number of respondents worried about this dropped from 63% in the previous quarter to 46%.
The perceived likelihood of disruption, such as a US attack on Iran, rose to become the number one concern as 57% of respondents thought it was likely or very likely in the next 12 months, while only 15% were not worried about it.
Business was especially concerned, with 65% saying a geopolitical disruption was likely or very likely, compared with only 39% of respondents from government.
Confidence in the state of the global economy nonetheless reached its highest level since the WEF began GCI four quarters ago.
One third of global experts from business, government and civil society said they were confident or very confident about the state of the economy over the coming 12 months, up from 13% of respondents in the previous quarter.
"This quarter's survey results do not signal a 'cautious optimism' returning, but merely caution as the global economy remains fragile.
"The perception that a significant geopolitical shock is possible in the next 12 months is a clear signal in this regard, given the interplay of global economics and geopolitics," says Lee Howell, WEF's MD responsible for its Global Risks 2012 report.
According to the report, one third of respondents were not confident about the state of the global economy (down from 61%), while confidence in the ability of political leadership to deal with geopolitical tensions increased, as did confidence in the state of global governance which increased from 15% to 21%, and confidence about global cooperation rose from 23% to 30%.
In January the global risks survey of 469 experts by the WEF showed that risk managers worried that further economic shocks and social upheaval could roll back the progress globalisation has brought. They felt that the world's institutions were ill-equipped to cope with today's interconnected and rapidly evolving risks.
Analysis of global risks revealed a constellation of fiscal, demographic and societal risks signalling a grim future for much of humanity.
The report indicates that interplay among these risks could result in a world where a large youth population contends with chronic, high levels of unemployment, while the largest population of retirees in history becomes dependent upon already heavily indebted governments. Both young and old could face income and skills gaps so wide as to threaten social and political stability.
In South Africa, which has one of the highest numbers of "service delivery protests" in the world, the Soccer World Cup in 2010 saw a reduction, while the municipal elections also meant fewer protests last year as residents could express their grievances through the ballot box.
The danger now is that residents will look to see delivery on election promises. - I Net Bridge BUSINESS LIVE