Top 5 Global Economic Risk Factors

Countries are seen facing heavy debts and recession, and especially in these situations of hardships that Covid-19 has put us through, it is wiser to know what all global economic risk factors can affect the financial growth of a country.


Unemployment can affect directly on the life of those who are already earning. Once unemployment starts within a society, it could spread like a wildfire.

If a person has stopped earning he will avoid spending his savings on unnecessary or luxurious items. Which in cases where a large amount of population has become unemployed, they will affect other industries as well. 

The unemployment situation of a country during recessions and challenging economic times attracts media.  

If companies that are planning to cut their costs let go of their employees. The pressure of work will automatically fall upon the remaining ones. These remaining ones will not be paid extra for their extra efforts.  

Unemployment can lead to Underemployment


Underemployment occurs because of two major factors. When the supply of workers is high than that of their demand and the country is facing a major economic decline.

Even highly skilled workers are forced to work within the environment which is way less compared to their skills, in such hard times. Underemployment along with unemployment is

Underemployment is of three types:

Visible underemployment

It is underemployment in which a person works for fewer hours and does a part-time job instead of a full-time job. Due to this, they work two or more part-time jobs in order to make ends meet.

Invisible underemployment

It is a situation in which a person is can’t find a job of their choices.

This situation forces them to work in a job that is not suitable when compared to their high skills. This situation pays a lot less than their industry standards.

The third type of underemployment is when individuals, are not able to find work in their chosen field, stop searching for a new job, and have not looked for a job for almost a month.

Long-time effects leading to global economic risk factors:

Underemployment has almost similar effects to those of unemployment. With less income, people start to avoid unnecessary spending. Ultimately, this reduces demand, which then affects business growth. 

It hits the nation’s GDP and put the whole country into a down growth.

Because of the hard times in underemployment, people almost stop to grow their skills-set.  In the worst-case scenario, they now might not return to their former field.

Younger graduates have chances that they might not get a good start in the career field.

These young people are then forced to accept jobs which are lower graded than their skills.

Fiscal Crisis:

The most unpredictable challenge which a country can face is a fiscal crisis. Usually, governments are seen to be unprepared when these situations occur. This has to be included in the list of top five global economic risk factors.

It is studied that building a budget surplus, encouraging business growth, providing employment can be started with, to grow back the economy.      

Studies also suggest that governments should avoid national loans and have less debt upon them to get over the fiscal crisis. Basically, avoid any projects which could have long term economic effects and can halt the economic recovery of a country.

Energy Price Shock:

Another unexpected challenge that can shake a country and its economy is Energy Price Shock. A non-planned decrease in the prices of energy resources has been proven to be having long term effects on the country exporting them. In this situation, consumers are forced to utilize the resources economically.

Most countries that are usually seen affected are Saudi Arabia, Qatar, Oman, and Bahrain. These countries have their economies totally dependent upon crude oil.

In 2016, due to global oversupply and a shift away from fossil fuels the price of crude oil fell below $30 a barrel. Countries including Kuwait saw their GDP fall to three percentages.

Crude oil somehow falls out of the actual energy resources which can be directly affected in Energy Price Shock. But, the prices are affected indirectly when it comes to the cost of shipping goods, the cost of air travel and in some areas the cost of home heating.


Cyber attacks are the second most risked economic factor which can destroy a country or an industry.

Data breaches and ransomware attacks have been confirmed to be the greatest threat to the USA, UK along with most of the countries in Western Europe.

Cyber-attacks could make companies pay thousands for the computer repair and to recover the lost data. The relation with clients and their trust, if lost, it can be very hard to gain the same truts again.   

Many studies also suggest that the next financial crisis will not be the same as it happened in earlier times. Aspects have been changed while considering finance of a country and many new technological adaptations have been made in the field of finance.

Cyber-crimes are at a high rise these days and they also hold a potential threat to disturb a whole country. Finance experts also call it a World War Web. They describe the digital attacks to be a grave threat to the whole world.

In the past 10 years, almost every country has faced a financial cyber-attack that shook them and most of the learned that this new technique will become fiercer in the future.

Along with all these, The Economist has mentioned

  • US-Iran conflict could lead to a spike in global oil prices
  • A trade war breaks out between the US and the EU
  • The coronavirus takes a lasting toll on the global economy
  • Debt burdens cause a recession across emerging markets

among the top 5 global economic risk factors, a country could face.

According to The Economist, the current global financial situation which has affected the whole world due to Covid-19 has been considered to be more critical than SARS.

The US-China trade war can also escalate if China is unable to deliver the commitments made under the trade deal with USA.