The World Economic Forum is predicting a second recession resulting from huge government fiscal deficits brought about by stimulus packages to cushion economies from the free fall and a slowdown in consumption.

In its latest publication titled Global Risks 2010: A Global Risk Network Report , the World Economic Forum (WEF) indicates that a second bout of recession was also likely because of underinvestment in infrastructure and high level of unemployment.

Global economies
The interconnectivity of global economies will drive the slowdown as a likelihood of a further dip in one economy will invariably affect other economies directly or indirectly.

“What has changed dramatically is the level of recognition that global risks, like the world, are now tightly interconnected and shocks and vulnerabilities are truly global, even if impact and response can still differ at the “local” level”, said Klaus Schwab the Founder and Executive Chairman of World Economic Forum.

The World Economic Forum which was set up five years ago brings together political leaders of major economies, top business executives and other influential persons to debate the global economy. This year's four day meeting started on Wednesday in Davos, Switzerland.

The report, which in previous years had been among the first to cite the prospect of a financial crisis, the oil crisis that preceded it and the ongoing food crisis, included a list of growing risks threatening leading economies.

Among the most likely, and potentially most costly, is a sovereign debt crisis, as some countries struggle to afford the unprecedented costs of the crisis clean-up which might set off a inflationary spiral melt down pulling the economies further back into recession.

The report notes that after the shock to the global financial system and world economy in 2008, last year was one of appraisal and adjustment.

According to local economists, though The Gambia may be immune to the direct happenstance at the global level, the aftershock is likely to bear heavily on the economy.

While the local economy is relatively immune to the global economy, a slow down in consumption in the West will mean declining foreign exchange earnings from exports, and declining remittances.

Similarly, a fall in consumption by the Western world will result in a decline in tourists affecting tourism receipts and the local tourism sector. It would also occasion some disinterest from foreign investors and ability of the government to access funds.

However, analysts agree that the ongoing infrastructural investment in roads repair and lowering of costs as well as the planned expansion of power generation will provide the economy with a better business environment which will eventually lower the cost of doing business.

Strong foundation
Emerging sectors driving the economy include real estate and construction, banking and communication as well as other services related to information communication and technology (ICTs).

“The biggest risks facing the world today may be from slow failures or creeping risks and because they emerge over a long period of time, their potentially enormous impact and long-term implications can be vastly underestimated”, said Mr.Schwab.

This year's report explores a set of risks that share a potential for wider systemic impact and are strongly linked to a number of significant, long-term trends.