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to limit currency depreciation and debt-servicing green technologies or build future resilience in loads, heightened volatility continues to drive education, healthcare and ecological systems, with demand for US assets. This has led to record capital impacts exacerbated by the most powerful and out昀氀ows from markets with weaker macroeconomic disproportionately borne by the most vulnerable, as fundamentals, with investors already withdrawing explored in Chapter 2.6: Economic stability. $70 billion from emerging market bond funds by 21 October last year. Geoeconomic warfare Growth agendas, including the critical pivot to greener economies, have been based on the “Geoeconomic confrontation” was ranked the availability of cheap debt. The extent to which third-most severe risk over the next two years by countries can continue to 昀椀nance development GRPS respondents. Interstate confrontations were will be dependent on domestic political and debt anticipated by both GRPS and EOS respondents dynamics. Sri Lanka’s recent crisis provides a very to remain largely economic in nature over the short real example of the spiraling risks to human security term. Geoeconomic confrontation – including and health that can arise from economic distress, sanctions, trade wars and investment screening – where a debt default and shortage in foreign was considered a top-昀椀ve threat over the next two currency limited imports; disrupted access to food, years among 42 countries surveyed by the EOS and fuel, healthcare and electricity; and led to violent featured as the top risk in many East and South- protests and the resignation of the President. East Asian countries, among others. In comparison, “Interstate con昀氀ict” was ranked as a top-昀椀ve risk in The scale of sovereign debt defaults could 28 countries surveyed by the EOS (Figure 1.7). signi昀椀cantly rise in weaker emerging markets over the next two years, in terms of both the percentage The weaponization of economic policy between value of total global debt and number of states in globally integrated powers has highlighted default (Figure 1.6). Although unlikely under the vulnerabilities posed by trade, 昀椀nancial and current trajectory to reach globally destabilizing technological interdependence - for the public and levels, the proportion of countries in or at high risk of private sector alike. The Ukraine con昀氀ict triggered debt distress has already doubled from 2015 levels.22 the imposition of sanctions, nationalization of key This will increase the global in昀氀uence of creditor players, and government appropriation of assets, nations and heighten state fragility as the capacity such as Germany’s seizure of Russian energy 24 to address simultaneous crises in food and energy companies' stakes in local re昀椀neries last year. 23 will be limited. Some countries will be unable to Reputational and legal risks for multinational contain future shocks, invest in future growth and company operations in certain markets also grew: FIGURE 1.7 National risk perceptions: interstate confrontation "Which five risks are the most likely to pose the biggest threat to your country in the next two years?" A. Geoeconomic confrontation B. Interstate conflict Rank Rank 1 10 20 30 1 10 20 30 Source World Economic Forum Executive Opinion Survey 2022. Global Risks Report 2023 19

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