The World Economic Forum (WEF) meeting took place in Davos this week for five days from Monday, It is a body with a stated aim “to shape global, regional and industrial agendas.” Its supporters like to be invited and its critics attack it as if it were some kind of global government.
It is an independent international organisation founded in 1971. It provides a meeting place for political, business, and cultural leaders to talk about problems, but with no power to make laws or binding treaties as an arm of world governmentcould. It is not like the World Health Organisation or the Climate Change COPs where governments have treaty and contractual obligations. It is only as influential as the power of its arguments and contacts.
This year the EU is represented by the President of the Commission and the Head of the European Central Bank, China by her Prime Minister, the US by the Secretary of State. Amongst the leaders of the main European countries, only President Marcon is dropping in. That is a good cast list but no guarantee of new policies or arresting speeches. Whilst the WEF wishes to be a leader it is often following the fashions of thinking that leading countries and other international bodies have already adopted. The central banks present are reining in expectations of early and rapid interest rate cuts.
The formal agenda is built around the central theme of “Rebuilding trust in the future”.
The main work areas are achieving security and cooperation in a fractured world, creating jobs and growth, artificial intelligence, and creating a long-term strategy for climate and nature. The WEF draws heavily on UN work and is using the outcomes from COP 28 for the work on nature and climate. It promotes the road to net zero, is respectful of the need for prudent government finances and dismayed by the wars and disputes which damage peace and impede trade.
The WEF has reported on the views of chief economists that completed its survey. This makes interesting reading. Over half (56%) expect the global economy to weaken this year, in line with general expectations in the market for the US and Europe. More than three quarters (77%) expect the labour market to loosen, by which they mean to make it easier to hire and more difficult for employees to get a wage rise. Almost as many (70%) expect financial conditions to loosen, pointing to lower interest rates and some relaxation of the past tight money squeeze. Again this is in line with market expectations. They see inflation coming down on both sides of the Atlantic.
A worrying 69% expect geo-economic fragmentation to accelerate in line with the trends we have often commented on with our retreat from the globalisation theme. A significant majority (79%) expect a growing tension in public policy between wishing to control state borrowing and deficits with the need to spend more on promoting national industrial champions.
This will be especially true in the areas where governments are seeking change to get closer to net zero.
They are positive about artificial intelligence with 79% thinking it will boost the efficiency of high-income countries and will entail faster innovation. More than half (56%) also think there will be a further decline in trust, presumably as more people have access to more data and more computer assistance to challenge existing wisdom and authority. The leaders will be worried about geopolitical tensions and some political trends in the democracies.
The conference will spend time on the current troubles of the Middle East. Business people are concerned about the disruption to trade, wanting to use the Suez canal but wary of possible attacks on merchant shipping. Both sides of the Israel/Hamas war will be represented with the opportunity for Qatar to have further talks with supporters of Israel and Hamas as an intermediary for a ceasefire. The conference will spend time discussing the good and bad disruptions that artificial intelligence will bring. It will go over traditional ground about how to get to net zero. It will return to the perennial issues of how to get faster growth with low inflation. We do not expect any great breakthroughs, which world leaders would choose to announce in other settings.
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Davos worries about artificial intelligence, war and slowing growth
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