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Recession and job losses among COVID-19 worries for business leaders

By Bo Leung in London | chinadaily.com.cn | Updated: 2020-05-21 01:07

FILE PHOTO: People who lost their jobs wait in line to file for unemployment following an outbreak of the coronavirus disease (COVID-19), at an Arkansas Workforce Center in Fayetteville, Arkansas, US April 6, 2020. [Photo/Agencies]

World leaders, businesses and policy makers will have to work together to manage the fallout of the novel coronavirus pandemic or risk the rise of economic distress and social discontent over the next 18 months, according to new findings published by the World Economic Forum.

The report, COVID-19 Risks Outlook: A Preliminary Mapping and its Implications, looked into the views of nearly 350 senior risk professionals and rank their biggest concerns in terms of likelihood and impact for the world and for business.

The state of the economy in light of COVID-19 dominates companies' risks perceptions. Prolonged recessions, the weakening fiscal position of major, tighter restrictions on the cross-border movement of goods and people and the collapse of a major emerging market are just some of the top concerns cited in the study.

The report, produced in partnership with Marsh & McLennan and Zurich Insurance Group, also looked into the interconnection between risks and called on leaders to act immediately against "an avalanche of future systemic shocks such as the climate crisis, geopolitical turbulence, rising inequality, strains on people's mental health, gaps in technology governance and health systems under continued pressure".

Saadia Zahidi, managing director of the World Economic Forum, said the pandemic has "triggered an economic crisis with far-reaching implications and revealed the inadequacies of the past".

"As well as managing the immediate impact of the pandemic, leaders must work with each other and with all sectors of society to tackle emerging known risks and build resilience against the unknown. We now have a unique opportunity to use this crisis to do things differently and build back better economies that are more sustainable, resilient and inclusive," Zahidi said.

The report found that two-thirds of respondents identified a "prolonged global recession" as a top concern for business. One-half identified bankruptcies and industry consolidation, failure of industries to recover and a disruption of supply chains as crucial worries.

Peter Giger, chief risk officer of Zurich Insurance Group, said: "The pandemic will have long-lasting effects, as high unemployment affects consumer confidence, inequality and well-being, and challenges the efficacy of social protection systems. With significant pressures on employment and education – more than 1.6 billion students have missed out on schooling during the pandemic – we are facing the risk of another lost generation. Decisions taken now will determine how these risks or opportunities play out."

The World Economic Forum noted that a "green recovery" and more resilient, "cohesive, inclusive and equal societies" can emerge if leaders act now.

John Doyle, Marsh president and CEO, said: "To create the conditions for a speedier recovery and a more resilient future, governments and the private sector need to work together more effectively. Along with major investments to improve health systems, infrastructure, and technology, one of the outcomes of this crisis has to be that societies become more resilient and capable of withstanding future pandemics and other major shocks."

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