DAVOS, Switzerland: Developing nations and emerging economies are facing the challenges of managing and mitigating risks arising from inflation, higher cost of living, energy crisis, climate change, debt, and geopolitical tensions.
"The short-term risk is the cost of living, from the perspective of developing markets and emerging economies. The cost of living issue started even before the pandemic and the pandemic has made it worse.
"The vulnerable groups are more affected and countries which are not in a strong position have suffered more,” Minister of International Trade and Industry Tengku Datuk Seri Zafrul Abdul Aziz said today.
Hence, when managing those challenges and risks, developing nations and economies need to be given enough time to do so.
"We all have the same end goal but the roadmap cannot be dictated by a certain group. Every nation has its own challenges,” Tengku Zafrul said in a session called "Living with Risk” at the World Economic Forum (WEF) 2023 here today.
The session was moderated by the Wall Street Journal’s deputy news editor Kimberley Johnson. Also present were Splunk president and chief executive officer Gary Steele, dean of the Blavatnik School of Government of the University of Oxford Ngaire Woods, and Observer Research Foundation president Samir Saran.
Tengku Zafrul, who led the Malaysian delegation to the WEF, went on to explain how in South East Asia flooding has been happening more frequently and severely than before.
"Some countries are not able to balance the short-term and long-term risks due to resource constraints. I was in the Ministry of Finance before and many countries had to increase their deficit by two folds, the fiscal position is very much constrained and is now faced with challenges going forward,” he said.
Recovery from the pandemic has also been uneven, he said, noting that the International Monetary Fund (IMF) and World Bank have also revised downward the global gross domestic product (GDP) growth forecast a few times.
Investments into developing economies during the pandemic were down by 70 per cent and 50 per cent during the financial crisis, he added.
"Hence, there needs to be a clear roadmap, (especially) for countries still recovering post-pandemic and at the same time facing immediate risks.
"Most developing economies are driven by small and medium enterprises (SMEs) and they do not have the resources to comply with the timeline given to them,” he pointed out.
On the other hand, markets also need to understand that the government alone cannot resolve all risk issues.
"It has to be a collaboration with civil societies and companies. It has to be a whole of nation approach in managing the risks,” he said. - Bernama