Participants in this morning’s session on The New Growth Context were told that monetary policy was not enough to encourage growth. “Policy-makers shouldn’t kid themselves,” said Axel A. Weber, Chairman of the Board of Directors, UBS, Switzerland. “They need to deliver policy reforms, not just loose monetary policy.” Weber listed labour market and pension reform as especially important, and cited Germany’s reforms under the Schröder government as an example for the rest of Europe to follow.
“Right now structural reforms are the only game in town. We need politicians to act,” added Min Zhu, Deputy Managing Director, International Monetary Fund (IMF), Washington DC; World Economic Forum Foundation Board Member. Zhu said that “worldwide, the whole banking sector is much stronger than a few years ago” but that “the risks have moved into the shadow banking sector.”
John Rice, Vice-Chairman, GE, Hong Kong SAR, emphasised the importance of infrastructure to global growth. “You don’t have sustainable, inclusive growth unless you have jobs, and you don’t create jobs unless you have good basic infrastructure,” he said.
David M. Rubenstein, Co-Founder and Co-Chief Executive Officer, Carlyle Group, USA, said that since governments and banks are no longer funding infrastructure investments as much as they did in the past, more and more infrastructure projects will be funded by private equity. “Right now the US seems the greatest place in the world in which to invest,” he said. However, he cautioned that economic growth there is leaving many behind, especially in middle- and lower-income groups.
Zhang Xin, Chief Executive Officer and Co-Founder, SOHO China, People’s Republic of China; Young Global Leader Alumnus, noted that China, unlike Europe, is suffering from too much investment and not enough consumption. “How do we grow consumption? We need tax reform,” she said. Although pro-consumption reforms in China are proceeding more slowly than she would like, Xin said that “the anticorruption campaign is working very well.”