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EVERY COUNTRY’S BIGGEST RISK TO THE ECONOMY

04/04/2019

Alexandra Berger, Senior Vice President, Marketing & Communications EMEA region, RS Components

There are countless predictions over what will be the next biggest threat to our economy, from risk of international conflict to failure of national governance, cyber attacks and even natural catastrophes.

 

Using World Economic Forum data, RS Components have mapped out the biggest risks to every country’s economy. Although the global economic outlook is stable right now, risks are always looming on the horizon. Question is, are we implementing the correct precautions to ensure we avoid these economical disasters as much as possible?

 

Alexandra Berger

You can view the map here. The biggest threat to economies across the world are:

 

Rank

Risk

Number of countries at highest risk

1

Employment

31

2

Cyber-Attacks

19

3

Government Failure

15

4

Energy Prices

14

5

Fiscal Crisis

11

 

Cyber Attacks are the biggest risk to the UK and US economy

 

Blasted across the news in the last few years, fears of cyber attacks has been on the rise, now becoming the biggest risk to both the UK and the US economy. Cyber attacks install a threat to a country’s ability to carry out secure financial transactions, and can install fear amongst the public extremely quickly, The impact these attacks can have on so many individuals makes this a threat really felt by the public, showing the power of web-based terrorism.

 

One such attack includes that of UK telecommunications provider TalkTalk who suffered a high profile data breach after falling victim to cyber hackers in 2015. The company lost £60 million and over 100,000 customers as a direct result of the incident.

 

Last year it was revealed that the cost of cyber crime is now up to 0.8% of global GDP or $600 billion a year. Europe suffers the highest economic impact of cyber crime, which is now estimated at 0.84% of the regional GDP, compared with 0.78% in North America, according to last year’s report on the economic impact of cyber-crime.

 

As a result of these threats, both the public and private sector are currently investing millions of pounds into installing cyber-security and ensuring companies and individuals feel safe on the web.

 

Employment is the biggest risk to the economy in the world

Impacting a staggering 31 countries, issues around unemployment and underemployment come out as the biggest risk to most countries in the world.

 

Unemployment in Europe

Despite a slight improvement this year, France holds one of the highest unemployment rates in Europe, at 8.8%. Unemployment figures have been a challenge for the country for a number of years – in 2017 between 200,000 and 330,000 vacancies were left unfilled.

 

With an increasing number of companies who are suffering financially from a lack of skilled workers, it is pivotal that the country find solutions to serve both employers and employees and minimise the risks that unemployment poses to their economy. One of the steps France is making towards reducing this threat is the government announcement in March 2018 that by January 2020, each worker (including those who work part-time) will be able to spend 5,000 euros over their careers on training courses of their choice. Will France manage their unemployment rates that pose such a threat to their economy over the next year or two?

 

Unemployment in Africa

Over two thirds of the countries whose economy is most threatened by employment issues are from Africa, including Zimbabwe, Angola, and Nigeria.

 

Youths account for 60% of all of those unemployed in Africa and women in particular feel the impact of unemployment as figures rise at higher rates for them than men. It is worth noting that Africa as a continent is considered relatively young, where the median age is about 19 years and is only expected to increase to 25 years in 2046. As a result, young people make up about half of the population of most countries on the continent in the next few decades. With many of these youths desperately wanting opportunities that will ensure a better life, it is important that countries across the continent (and globe) work towards ensuring development schemes are implemented, and more youths are given opportunities in employment.

 

Natural catastrophes

Other issues that threaten country’s economies include failure of national governance, which impacts the likes of Greece, Ireland and Croatia, and energy prices, being the biggest risk to Australia’s economy.

 

Natural catastrophes are predicted to be the biggest risk to the economy for countries such as Iceland, Chile and China. China is one of the countries most affected by natural disasters, with 5 of the top ten deadliest natural disasters (based on death toll) having occurred in China. It’s no surprise then, that natural catastrophes are a huge risk to the Chinese economy.

 

Over the years China has been affected by several types of natural disasters including floods, droughts, ecological disasters, forestry and grassland fires, and many more. Not only do these disasters stand in the way of economic development of the region, but these natural disasters pose serious threats to life, as well as affecting the sustainable development of the country’s economy and society, and threatening the national security and social stability of the country.

 

Will these countries manage to avoid the biggest threats to their economy?

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Finance Derivative is a global financial and business analysis magazine, published by FM.Publishing. It is a yearly print and online magazine providing broad coverage and analysis of the financial industry, international business and the global economy.