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Debt could make fragile states of the West

world Updated: Jan 12, 2012 01:03 IST
Dipankar De Sarkar
Dipankar De Sarkar
Hindustan Times
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Debt-saddled wealthy countries could descend into anarchy over the next decade, hit by a widening income gap, rising unemployment, failing social services and an aging population, the World Economic Forum warned in a report published on Wednesday.

The emergence of these "critical fragile states" - formerly wealthy countries of Western Europe, North America and Japan that slip into lawlessness - could end up reversing the gains of globalisation, said the WEF's Global Risks report for 2012.

"The social contract that has in recent decades been taken for granted is in danger of being destroyed. Workers nearing retirement fear cutbacks in social entitlements they have grown up to expect..." it said.

The report, based on the risk perceptions of 469 experts and industry leaders, shows a shift of concern from environmental to socioeconomic risks from a year ago.

The challenges for India and other emerging economies were different, the report said: "Rapid economic growth in emerging economies has fuelled an impatient expectation that a rising tide will lift all boats, but social contracts may not be forged quickly enough to rectify increasingly visible economic inequalities and social inequities."