The World Economic Forum (WEF) has put into the spotlight the role that developed countries should play in helping emerging economies mitigate against climate change, stabilise energy supply, and improve food security amid a looming global recession.
The WEF Annual Meetings 2023 in Davos kicked off on Monday with a bleak global economic outlook for 2023, which showed that a recession in the developed world would be felt more severely in developing countries.
A majority of the WEF’s Community of Chief Economists forecast geopolitical tensions to continue to shape the global economy and anticipated further monetary tightening in the United States and Europe.
On inflation, the chief economists see significant variation across regions, with the proportion expecting high inflation in 2023, ranging from just 5% for China to 57% for Europe.
They said multiple headwinds were also expected to exert a drag on business activity in 2023, leading multinational businesses to cut costs to reduce operational expenses, lay off workers and optimise supply chains.
WEF managing director Saadia Zahidi said the global economy was in a precarious position.
“The current high inflation, low growth, high debt and high fragmentation environment reduces incentives for the investments needed to get back to growth and raise living standards for the world’s most vulnerable,” Zahidi said.
“Leaders must look beyond today’s crises to invest in food and energy innovation, education and skills development, and in job-creating, high-potential markets of tomorrow. There is no time to lose.”
The outlook was made dire by a global survey of 800 executives of small and medium-sized enterprises (SMEs) and mid-sized companies, which showed that 67% of SMEs worldwide were fighting for survival.
SMEs are the backbone of the global economy, creating close to 70% of jobs and gross domestic product worldwide, and a global recession could spell disaster for many in the workforce.
The Davos meetings also acknowledged that the current energy crisis created by the Russia/Ukraine war was driving inflation, slowing economic growth and creating social turmoil.
A new report, Securing the Energy Transition, proposed a comprehensive framework that provides a strategic blueprint to make security and resilience the backbone of a transitioning energy system.
The report proposed 10 immediate interventions to address the energy crisis, including prioritising supply from renewable energy and constraining fossil fuel reinforcements, advocating for a diversified energy and trade matrix, and addressing methane leakage from hydrocarbon supply chains.
“What is now a global crisis is a real opportunity to steer a more direct course towards a secure, sustainable and affordable energy future for everyone,” said Roberto Bocca, WEF’s head of Shaping the Future of Energy.
“This requires radical collaboration and a pragmatic approach to confront the complexities of the energy transition with immediate actions.”
On climate change action, top CEOs from real estate and other industries pledged to reduce buildings-related emissions by at least 50% by 2030 and be fully net-zero carbon no later than 2050.
Real estate is one of the biggest sources of global greenhouse gas emissions but is often overlooked in wider decarbonisation strategies.
This was a theme also reiterated by the United Nations António Guterres on Thursday, who issued a fresh call for the world’s leaders not to ignore the climate crisis.
Guterres warned that climate change for many would mean a death sentence unless tough political decisions are made, adding that private industry needed to do more to help the climate too.
“Every week brings a new climate horror story. We are calling on industrialised nations to finally deliver on their $100 billion (R1.7 trillion) climate finance commitment to support developing countries,” Guterres said.
“Greenhouse gas emissions are at record levels and growing. The commitment to limit global temperature rise to 1.5 degrees is nearly going up in smoke. Without further action, we are headed to a 2.8-degree increase.”
BUSINESS REPORT