Rich-Poor Gap ‘Becoming More Extreme’ Globally

The rising difference between the rich and the poor is the second most quoted trend for next year in a list compiled by the World Economic Forum (WEF), which surveyed experts from all areas of the globe.

The overall results of a survey of 1,500 global experts show rising social tensions in the Middle East and North Africa (MENA) on top of the list of worries, followed by widening income disparities.

However, the fear of widening income disparities tops the list of trends in the survey for Asia, Latin America and sub-Saharan Africa.

Since the crisis started, major central banks have printed money to boost their economies but many analysts have warned that this actually created asset price bubbles both in the developed and in the developing world, widening the gap between the rich and the poor.

“The difference between rich and poor is becoming more extreme, and as income inequality widens the wealth gap in major nations, education, health and social mobility are all threatened,” the WEF said in the chapter of the survey release dedicated to this issue.

More and more poor people are now in middle-income countries, where despite “robust macroeconomic growth,” large parts of the population are being left behind.

Inequality is on the rise in the US as well, the survey warned.

“The incredible wealth created over the last decade in the US has gone to a smaller and smaller portion of the population, and this disparity stems from many of the same roots as in developing nations,” it said.

Lack of access to good quality education at primary and secondary level is one of the main reasons for inequality, according to the report.

“Additionally, it has become prohibitively expensive for the average middle-income family to send their child to college in the US; higher education, once seen as the great equaliser and engine for economic mobility, is becoming unaffordable for far too many.”

The issue of widening income disparity is creating unrest, which for the moment manifests in the desire to change from one political leader to another, the WEF warned.

“Over the next decade, particularly in developing countries where much of the population is under 30, the lack of access to jobs will increase the risks of political and social strife,” it said.

@AntoniaOprita