A ‘perfect storm’ is brewing in the response to Covid

People wearing protective face masks walk on the main shopping street in Munich, Germany during the coronavirus crisis on April 30 2020.Alexander Hassenstein/Getty ImagesLONDON — The “inward-looking national agenda” of certain countries in response to the coronavirus pandemic is threatening global resilience in the wake of the crisis, suggested one panelist behind the World Economic Forum’s 2021 global risks report. Carolina Klint, risk management leader for Continental Europe at Marsh & McLennan, told CNBC’s Geoff Cutmore on Monday that there were lessons to be learned in the collaboration required to get coronavirus vaccines developed at an “unprecedented speed.” However, she added that the “inward-looking national agenda” of some countries was “a point of concern.” Her comments come as some wealthier countries are being criticized by campaigners for “hoarding” more doses of coronavirus vaccines than they need, while lower-income countries struggle to get enough shots to immunize their populations. An Amnesty International report in December raised concerns about “vaccine nationalism,” naming the U.K., U.S., EU, Japan, Canada and Australia as among the biggest advanced buyers of vaccine doses. On Tuesday, the co-chair of the World Health Organization’s independent pandemic review panel, Ellen Johnson Sirleaf, shared her disappointment that “vaccine roll-out is currently favoring wealthy countries.” Zombie companies; asset bubblesKlint said the “substantial” stimulus packages that governments had injected into their respective economies in the immediate response to the pandemic also dovetailed into the “ongoing trend towards self-sufficiency which has been accelerated by Covid-19.” She added that there was the risk of “business zombification,” if stimulus packages were not “properly structured.” “So it’s really a perfect storm here brewing,” she said. So-called zombie companies are considered laggard businesses that need debt to operate, or earn just enough to survive and service their debt. This has been a concern amid the pandemic with increased support for businesses from governments and central banks. Similarly, Klint warned of asset bubbles — when an investment rises rapidly in price driven by market momentum rather than underlying fundamentals — as a another potential risk. Perhaps unsurprisingly, infectious diseases were found to be considered the highest impact threat over the next decade, in WEF’s annual global risk report. By comparison, in January 2019 the spread of infectious diseases was ranked as the tenth biggest risk in terms of potential impact over the next 10 years. In its very first global risk report in 2006, WEF highlighted the threat of an influenza pandemic as one of four key risks. It warned that a “lethal flu, its spread facilitated by global travel patterns and uncontained by insufficient warning mechanisms, would present an acute threat.” The annual report is based on WEF’s Global Risks Perception Survey, completed by more than 650 members of the forum’s “diverse leadership communities.” In this year’s risk report, infectious diseases, along with livelihood crises, were also named the top short-term threats to the world, according to 60% of the survey’s respondents. Klint added that the: “Covid-19 pandemic has changed the way we think about risk, it’s raised awareness that disasters that could potentially cause mass death and destruction can actually happen.” Extreme weather, climate action failure and human-led environmental damage were considered by the WEF survey respondents to be the most likely risks over the next decade. This continued the trend from last year’s report, in which all five of the top long-term global risks were about environmental concerns. Alongside employment and livelihood crises, digital inequality and youth disillusionment were listed among the most imminent threats to the world, with the report’s focus on the widened societal gaps caused by the pandemic.

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