World+economy+can+not+face+'new+major+shocks'+--+Jackie+W

Title: World economy can not face 'new major shocks'

Source: http://www.bbc.co.uk/news/business-12172716

12 January 2011

The article is mainly referring to the of economic 'shock' factors that is impacting the global market, particularly in terms of its ability to maintain sustainable development. These 'shock' factors include the following: extremely volatile prices resulting from the financial crises, government budget restrictions, and rapid population growth. The article states that in order for all countries to maintain sustainable development, these factors must be controlled and cannot happen again. There are a number of reasons why the 'shock' factors are affecting the economy to such a degree. For one, the volatile prices are becoming key threats to both consumers and companies because it is making staple goods inaffordable to more people. For example, the price of coffee has gone up 77% and cotton up 84%. However, the demand for these goods have not changed despite the price change due to the fact that these commodities are inelastic, and therefore, more people are in need for the same quantity of these goods for higher prices, thus there will be an increased rate for people who cannot afford food. Governments are also incapable of creating an international commodity agreement for these goods because either they don't have the resources for creating buffer stocks or that they simply have no idea how to achieve sustainable economic growth. A second issue is that of overpopulation. There is only a scant amount of resources for a population that will grow by 30-50% in the next twenty years. Therefore, there is a danger of a shortage because the demand for these goods will continue to escalate while the supply for these commodities stay the same. In conclusion, in order for the world to maintain sustainable development, international communities must address economic problems that threaten global security, including volatile prices and rapid population growth.

Staple good: Consumer goods (bread, paper, milk, sugar) which are frequently bought and have no price differentiation. Commodity: A commodity is some good for which there is demand, but which is supplied without qualitative differentiation across a market. In other words, it is the same no matter who supplies it. Sustainable development: Development which seeks to produce sustainable economic growth while ensuring future generations' ability to do the same by not excessively using the resources of nature. Factors of demand: Factors that affect demand: eg. number of consumers, substitute and complement goods, etc. Sustainable growth: Sustainable growth is economic growth that can continue over the long-term without non-renewable resources being used up. Volatil ty: the degree to which prices fluctuate Inelasticity: A product in which its market does not respond largely to changes in one of the market's parameters (supply, prices, etc). commodity agreement: an agreement between countries to stabilise the price of an international commodity by fixing a global price or buying buffer stocks.
 * Vocabulary:**

Although this article is only suggesting what will happen in the future, I believe that its predictions are accurate because it does address fundamental problems that are currently affecting our present economy, such as overpopulation. The issue of population affecting the supply of food is also based upon economic concepts--concepts such as the idea of a shortage resulting from a larger quantity of demand than the quantity of supply. I also think that the potential effects of the problems that the article is describing will most likely hurt those who are in the lower classes and will be most affected by the change in prices and lack of staple food supplies in the future. Of course, eventually those in the middle and upper class will also be affected, and that will mean that some countries will undoubtedly have problems with food deprivation. This will most likely fuel conflicts within nations but also between nations.