Unit 4 Macro: Clusters of Risks for the Global Economy

Here is a good evaluation phrase to use when building an answer in an A2 macro essay - “clusters of risks” - it captures the inter-connected and multi-polar nature of our world economy and also the many fragilities and uncertainties that surround us at the moment we many countries struggle to achieve a durable recovery.

The clusters of risks are mentioned in a new report on the risks facing the global economy published by the World Economic Forum ahead of the annual 2012 meeting in Davos.

Specificially:

1/ The threat of a new economic crisis which could arise from the tension between the increasing power and wealth of emerging economies and the high levels of debt in the west.

2/ An “illegal economy nexus” involving fragile states, illicit trade, organised crime and corruption. The report said the value of illicit trade was an estimated $1.3tn (£830bn) in 2009.

3/ The “unsustainable pressures” on resources created by a rising population and growing prosperity, which was expected to increase demand for food, water and energy by 30-50% in the next 20 years.