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Sat 25 Aug 2012 10:46 AM

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Global economic confidence slumps to new low

Latest survey by World Economic Forum shows relative optimism of Q1 has evaporated

Global economic confidence slumps to new low

Confidence in the state of the world economy is at its lowest ebb for more than a year, according to the World Economic Forum (WEF).

It said its latest global confidence index was at its lowest mark since launching five quarters ago.

The relative optimism of the previous quarter evaporated against a backdrop of slowing growth in the US and China as well as a lingering eurozone crisis, with 72 percent of respondents to the poll reporting that they were not confident about the state of the global economy over the next 12 months, up from 37 percent.

“Despite every effort to ensure economic, social and political stability, we are still just one shock away from everything getting off track again – which points to the need for greater resilience globally,” said Lee Howell, managing director at the World Economic Forum, who is responsible for the Forum’s Global Risks 2012 report.

All three of the main confidence indices measured in the poll of 430 experts reflected a markedly more negative outlook in the third quarter of the year.

As well as the gloomy overview, 68 percent of experts now gauge a significant economic disruption to be likely or very likely in the next 12 months, up from 46 percent in the second quarter.

The perceived likelihood of a big societal disruption also increased, with 53 percent of respondents seeing this as likely or very likely over the next year, up from 46 percent three months previously.

Meanwhile, concerns about a major geopolitical disruption remained stable at 55 percent.

Respondents were increasingly worried about the ability of existing institutions to cope with the multifaceted crisis.

Some 61 percent of the experts surveyed were not confident in global governance, up from 45 percent in the previous quarter, while those who lacked confidence in global cooperation rose to 48 percent from 37 percent.

The global confidence index – a joint initiative of the World Economic Forum’s Risk Response Network and Global Agenda Councils – targets a large group of international experts who focus on monitoring key trends, identifying global risks and mapping their interlinkages.

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