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World Can't Cope With Further Shocks: WEF Report

The world is not in a state to withstand further shocks in 2011, according to a report by the World Economic Forum's Network of Global Agenda Councils.

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Published ahead of the WEF's annual meeting in the Swiss ski resort of Davos, the report highlights four risks which must be adressed over the next 12 to 18 months.

The report said institutions which were already fragile before the 2008 crisis have become even more so in the face of global instability, and would therefore not be able to deal with further shocks.

It said the growing demand for natural resourceswas another issue which needed to be given far greater attention.

"With the population set to top 7 billion, the resource strain threatens to undercut growth, create environmental problems and cause social and political conflict," the report said.

Resources such as oil, copper and iron are being rapidly depleted — and demands are only increasing.

Policymakers also need to keep a close eye on financial markets, the report said.

Markets are still reeling from the worst economic crisis since the 1930s, and the economic recovery remains precarious.

With rational expectations crushed by the global economic crisis, irrational investor behaviour could create the potential for currency wars and fiscal crisis, the report said.

The Network of Global Agenda Councils, which monitors key trends and risks, also highlighted the shift in global power we are currently witnessing as an important trend that needs to be watched closely.

As Chinese President Hu Jintao visited the United States, the report pointed out that emerging markets had become "centers of growth and political decision-making"

As a result, "it is impossible for any stakeholder to address global challenges in isolation,” Professor Klaus Schwab, Founder and Executive Chairman of the World Economic Forum said in the report.