WEF Warns Of Pending US Slump

The World Economic Forum has today announced that it envisaged a recession in the US over the next year, which could lead to problems for businesses stateside and further afield, and would require firms everywhere to reconsider their risk management strategies over the immediate short term.

In its annual report entitled ‘Global Risks 2008′, the Forum highlighted what it sees as a major threat to business activity in light of growing uncertainty over the health of the economy in the US following the sub-prime collapse and the problems derived from the spectacular crash of the summer months onwards.

The situation in the US, according to the report, is likely to get worse before it starts to get better, as the growing impact of the credit crunch compounds housing market instability and the disaster of the banking industry at the moment, all of which has mounted to dent consumer cofidence and harm the overall economy.

Ultimately it is predicted that the vicious circle of problems will lead to a US recession, which will give rise to problems for business across the world, all of which have been advised by the report to prepare for the impending storm likely to emerge from the US fallout.

Amongst certain of the interesting forecasts laid down in the report was that food would become more focal in the worldwide debate, with global warming and extreme weather patterns damaging crop yields and leading to problems with supplying basic stable foodstuffs such as bread, rice and grains. Particularly with the dramatic rises in wheat prices over the last few months, the report cited food shortages as a growing threat, and an increasing global risk for the next twelve month.

It remains to be seen how industry will adapt its risk management procedures in order to deal with the visible threats from a downward sloping US economy, and wider economic and political issues.

Category: Insurance News