Home / International / Catastrophes 'put $847 billion in jeopardy'
16 December 2019
Catastrophic events could wipe more than half a trillion dollars from world economic growth in 2020, according to the Cambridge Centre for Risk Studies’ latest Global Risk Index.
The index, which quantifies the GDP impact of unpredictable shocks on 279 of the world’s largest cities, also finds that social unrest is the risk event that has advanced most in the past year.
Compiling the impact from 22 threat categories into a single measure of economic loss, it estimates the global economy could see $US584 billion ($847.2 billion), or 1.6% of global gross domestic product (GDP), axed by catastrophic events net year.
The estimate is 3% higher than its previous annual report.
The top three classes of threats are natural catastrophes at $US179 billion ($259.67 billion); financial, economic and trade risk at $US149 billion ($216.15 billion); and geopolitical and security risks at $US141 billion ($204.55 billion).
The 22 categories in order of highest risk to 2020 GDP are: a market crash, interstate conflict, tropical windstorm, human pandemic, flood, cyber attack, civil conflict, earthquake, commodity price shock, sovereign default, drought, terrorism, power outage, social unrest, plant epidemic, volcano, solar storm, temperate windstorm, freeze, heatwave, nuclear accident, tsunami.
The top single threat to GDP overall, a market crash, puts $US106.5 billion ($154.5 billion) at risk, though environmental risks pose the greatest danger as a combination of tropical windstorms (third place, $US68.3 billion ($99.08 billion), floods (fifth place, $US47.6 billion ($69.05 billion), and earthquakes (eighth place, $US36 billion ($52.22 billion).
Social unrest jumped three places in the 22 category rankings to a GDP risk of $8.3 billion ($12.04 billion) for 2020.
Protest action by groups like Extinction Rebellion have made disruption and global days of action commonplace in the West again, the Index notes. It says the target of these protests “is governments and the major polluting and climate-changing corporations they have failed to penalise”.
“Does 2020 signal the re-emergence of a global protest movement, akin to the Arab Spring and Occupy movements?
“With a summer of demonstrations and rioting among young people in Hong Kong, affecting tourism, business continuity, and air travel, a new era of unrest does appear to be in the making.”
Excluding cities in Japan and Iraq, all Asian cities in the top 20 ranking have a natural catastrophe risk as the top threat.
Tokyo and Istanbul are the top two cities for GDP risk, with interstate conflict putting $US24.72 billion ($35.86 billion) and $US18.8 billion ($27.27 billion) respectively in jeopardy.
New York ranks third, with risk of market crash putting $US 16.06 billion ($23.3 billion) in GDP in jeopardy. Market crash is also the event to pose most risk to the economies of Mexico City, London, Sao Paulo and Paris.