World Economic Forum Sees > 20% Chance Of Another Financial Crisis

The World Economic Forum just released its Global Risks 2010 annual report, and it concludes that there is a greater than 20% chance of another asset price collapse occuring in global financial markets in the near term.

The six major global risks that it outlines in its report are as follows:

Risk #1: Asset Price Collapse:

The fact that the risk of an asset price collapse remains the strongest risk on the global landscape illustrates the continuing uncertainty about the resilience of the global economy and the effectiveness of fiscal and monetary responses, governance and regulation.

Risk #2: China Growth Falling to 6% or Less:

A loss in China's growth momentum could adversely affect global capital and commodity markets. The implications of a fall in China's growth would be particularly acute for its trading partners if it should happen before the global economy is on a more resilient path.

Risk #3: Fiscal Crises:

In response to the financial crisis, many countries are at risk of overextending unsustainable levels of debt, which, in turn, will exert strong upwards pressure on real interest rates. In the final instance, unsustainable debt levels could lead to full-fledged sovereign debt crises.

Risk #4: Underinvestment in Infrastructure:

Multiple studies across the world repeatedly highlighted that vast segments of our water, energy and transport infrastructure are structurally deficient or functionally obsolete, requiring considerable annual investments to avoid catastrophic failure.

Risk #5: Chronic Diseases:

As a consequence of profound socio-demographical transitions among large sections of the world population, changing physical and dietary habits, chronic diseases including cancer, diabetes, cardiovascular and chronic respiratory disease are continuing to spread rapidly throughout the developed and developing world, driving health costs while reducing productivity and economic growth.

Risk #6: Afghanistan:

The instability in the region is already a source of suffering for the local population. Their plight is compounded by the stress that rapid population growth and impact of climate change are placing on resources, in particular water.

The World Bank has warned that population growth is already causing water stress and could soon result in outright scarcity. The social and economic consequences of this should be as much a focus for the international community as the geopolitical implications.

Stay tuned.........................