The World Economic Forum asked a panel of 1,500 experts to identify the 10 trends that would shape the global agenda in the coming year and their significance. Four of the 10 trends identified are economic in nature; however all 10 will have an impact on global economic activity.
Readers may also feel that some of these 10 trends may not be so relevant to Malta or would attach greater significance to some trends than the panel of the World Economic Forum did.
The four trends that are economic in nature are persistent structural unemployment, widening income disparities, a diminishing confidence in economic policies and an expanding middle class in Asia. To a great extent the first three trends are interconnected, while the fourth one may actually be one of the causes of such developments.
The issue of persistent structural unemployment is one that has already been felt in 2013.
Maybe the issues that we face today appear to be very hard to resolve because of a lack of values in leadership
As the EU economies together with that of the US struggle to create economic growth, this growth has not been accompanied by an increase in employment.
Unfortunately the feature of jobless growth is not one that is new to this part of the world.
We have experienced it in past recessions. This also means that the benefits of economic growth will not be felt across the whole economy, which will then lead to widening income disparities.
Before the global financial and economic crisis of 2008 onwards, economic growth was robust enough such that incomes generally grew in all segments of the economy. This did not mean that we did not have widening income disparities, as the various scandals in the banking sector have shown.
However as economic growth is generated (albeit very fragile) while unemployment remains high, such income disparities are expected to become more marked and the rich will become richer while the poor cannot expect to make any headway.
As most of society will not be getting the benefits of economic growth, there will be a diminishing confidence in economic policies. Several governments are already helpless because their space for manoeuvre is diminishing thanks to unsustainable fiscal deficits, and as they fail to deliver meaningful economic policies, they will continue to lose the trust of the general public.
I have stated that one of the causes of such developments could be the growing middle class in Asia. Such a development will force the governments in that part of the world to create employment that is not linked to traditional activities, such as agriculture. They still have the benefit of lower production costs, essentially thanks to cheap labour, and as such can attract investment from North America and Europe.
The end result is a further migration of jobs leading to high unemployment in our part of the world, further income inequality and a sense of helplessness on the part of politicians to resolve economic issues.
The other trends identified by the WEF panel of experts are inaction on climate change, rising social tensions in Middle East and North Africa, the growing importance of megacities, intensifying cyber threats and increasing misinformation on line.
The inaction on climate change is a direct result of governments failing to agree whether there exists a real threat or whether the issue of global warming is one big hoax.
The tensions in Middle East and North Africa are really a conflict that is more ideological in nature. It is indeed sad that the Arab Spring of three years ago has faded away.
However, we also need to accept that there is a serious threat to the way of life as we know it, if the leaders in that part of the world are fundamentalists intent on declaring war on America and Western Europe.
It is interesting to note that the WEF experts have mentioned two trends related to information technology. What has been accepted as one of the most significant positive developments of the last 20 years is now being seen as representing a threat because of misuse.
One question that arises from all this is whether over the next few years we shall be seeing a retrenching process taking place and a dismantling of the globalisation process.
If we cannot resolve the unemployment issue, will governments be tempted to adopt protectionist economic policies?
If political tensions in certain parts of the world cannot be resolved, will Europe and North America be tempted to build a protective wall to keep out terrorism as well as people who refuse to adjust to what many describe as the Western way of living? If internet becomes a threat, will people move away from it and use it less?
This gets me to the 10th trend identified by the WEF experts, which is a lack of values in leadership. Are the political leaders up to it?
It is not enough to take decisions that may have a benefit in the short term such that re-election is guaranteed. Leaders are expected to do what is right for the common good as well as for the benefit of future generations.
The business sector also needs to act according to a set of values that is not guided by selfishness and the need to make a profit at all costs. Maybe the issues that we face today appear to be very hard to resolve because of a lack of values in leadership.