By Kevin Okoth Ouko-Research and Policy Analyst-JENA
The global landscape is experiencing a compounding series of interconnected challenges that threaten global stability often referred as ‘polycrises’. Adam Tooze, an economic historian from Columbia University and contributing editor of Financial Times, introduced the term “polycrisis” to his readers in October 2022. He argued that with climate change, an impending nuclear war, a pandemic, and a global economic downturn, the world is currently experiencing the most intricate and concurrently developing combination of crises in contemporary history.
Polycrisis became a buzzword for financiers, politicians, and policymakers in January 2023 at the World Economic Forum in Davos as they peeked for a way to discuss “business as usual” in a drastically changing world. These crises span a wide range of issues, from climate change and health pandemics to economic downturns and social unrest. It is crucial to understand that these crises are not isolated incidents but rather interconnected in complex ways. The causal linkages by which one global crisis triggers or exacerbates another represent a growing danger to humanity. The confluence of shocks – the cascading impact of the Covid-19 pandemic, the war in Ukraine and severe natural disasters – have eroded Africa’s development gains, resulting in a staggering 149 million previously non-poor Africans now facing the risk of falling into poverty. Extreme poverty is increasingly concentrated in countries that are fragile, war torn, and conflict ridden. Many of these regions are vulnerable to climate change, which is expected to further impede human development. Further, the World Investment Report 2023 shows that global flows of foreign direct investment fell by 12 per cent to $1.3 trillion in 2022 compared to 2021. The slowdown was driven by the global polycrisis: the war in Ukraine, high food and energy prices, and debt pressure. Policymakers are navigating these crises against a backdrop of persistent concerns about inflation and economic growth as well as changing ideas about how to reconcile competing goals affecting the global economy.
The Global Risks Report 2023 from the World Economic Forum describes the early 2020s as “a particularly disruptive period in human history”. The report is underpinned by the Global Risks Perception Survey. The Covid-19 pandemic provided a watershed moment to the global economy, offering humanity an opportunity to rethink our societal and economic arrangements and transform our economic and societal arrangements in a comprehensive way, making them more resilient to future shocks, while ensuring environmental sustainability, intergenerational fairness, a dignified existence, and a just share of the fruits of progress for all. Additionally, the war in Ukraine exposed an estimated 70 million people to food insecurity, on top of the 765 million humans who already went hungry in 2021. According to the Global Hunger Index 2023 estimates, 58 countries are unlikely to reach low hunger levels by 2030, based on their recent development. In some countries, decades of progress in overcoming hunger are in the process of being reversed.
Subsequently, the UN Sustainable Development Goals to eradicate poverty and decrease inequality are approaching their halfway point this year (2023)—eight years in and eight years out. However, these promises are still rather far off. The report on ‘Global crises further threaten progress on SDGs’ by UN Development Programme (UNDP), the Economic and Social Commission for Asia and the Pacific (ESCAP), and the Asian Development Bank (ADB) exposes how polycrises are undermining the progress made towards achieving the Sustainable Development Goals (SDGs). The impacts are significant, particularly on issues such as poverty reduction, access to healthcare, and food security. The interplay of crises, like the COVID-19 pandemic and climate change, has disrupted the global effort to achieve these goals. This underscores how the interconnected nature of polycrises hinders development. Similarly, in a recent research article published in September 2023 on Navigating polycrisis: long-run socio-cultural factors shape response to changing climate, the authors highlights the enduring influence of historical socio-cultural factors on responses to changing climate, demonstrating the need for localized, culturally sensitive approaches to address the challenges posed by polycrises like climate change.
Addressing this complex web of crises requires international cooperation, innovative policies, and a collective commitment. The Africa Export and Import Bank (AFREXIMBANK) report on ‘Africa’s 2023 Growth Prospects: Securing growth resilience in a ‘polycrisis’ world’ advocates for resilience-building measures, policy priorities, and international collaboration to secure sustainable economic growth and development across the continent. In responding to the climate change crisis, the world needs a much stronger effort to support local and regional adaptations to climate change that are mindful of how well-intentioned measures can also lead to maladaptive outcomes that can exacerbate local grievances. Global efforts such as the Paris Agreement in 2015 represented a milestone in the fight against climate change, with 196 countries signing a legally binding agreement to limit the increase in the global mean temperature to no more than 2oC. COP28 is a pivotal opportunity for countries to deliver on their commitments to build a more resilient world This includes countries stepping up support for vulnerable communities today to avoid the worst tomorrow. The path forward involves not only managing the current crises but also adopting sustainable practices and policies to prevent future polycrises and build a more resilient and secure world for all.
In response to the economic crisis, the threat posed by inflation to the economy and the burden it places on the average person trying to make ends meet, it is now a major worry in many nations, and there is a growing chance that inflation expectations will become unanchored, which would make inflation more entrenched and more difficult to manage. Central banks should respond forcefully to this challenge by monitoring the economy closely and making necessary policy adjustments. And, naturally, using clear communication.