But the simple truth is that global warming is not going to be solved by taking more action in Western Europe, where the carbon intensity of economic growth (CO2 emissions per unit of GDP) continues to fall and where total CO2 emissions are already lower today than in any non-COVID year since 1964. Nor is the solution to be found in the United States, where total emissions have been falling for more than twenty years.
Back in our Alpine paradise, we see that Switzerland’s total CO2 emissions in 2021 – the latest available figures - amounted to just 35 million tons (Mt). That’s for a full calendar year. Compare this to China whose emissions last year were 31.5 million tons per day or to India’s 52.1 million tons per week. Switzerland is responsible for less than one-thousandth of the world’s total CO2 emissions.
Obviously, Switzerland is a small country. But its much bigger neighbour, Germany, produces just 1.8% of global emissions and the UK just 1.6%. It takes China just 3 weeks to emit the same amount of CO2 that Germany does in a full year.
For all its tiny contribution to the planet’s problem, the fact remains that Swiss glaciers are shrinking. Davos delegates saw far less snow than in previous years and many of the lower-lying ski destinations across Europe are currently struggling to stay open. The symptoms of global warming are clearly visible in Switzerland but the root cause is thousands of kilometres away.
The eight largest economies in Asia collectively produce 18.9 billion tons of CO2 per annum. And though China accounts for more than 70% of this, the other seven have greater total emissions than the entire EU-27 group of nations. These Asian countries - driven by rapid economic and population growth - are increasing both their CO2 emissions and the carbon intensity of their output. A just and sustainable energy transition for them is an urgent global priority, delivering for the region’s Industrial Revolution without the environmental damage and pollution suffered in Europe and North America when countries there first grew prosperous.
The benefits of investment in Asia’s energy infrastructure – greening its electricity production, stabilising its transmission grids, and making it more efficient – will be felt not just in that region, but around the world. Global warming is, by definition, a global problem and addressing its primary cause will benefit everyone. Not just the rapidly growing populations in Asia’s South and South-Eastern nations, but coastal atolls, small island states and even, yes, Swiss alpine resorts.
Key to this energy transition is understanding not just why Asia matters in its own right, but why it is so important to the rest of the world. For Europe and North America to offshore vast swathes of manufacturing industry to that continent then to lecture about emissions is not just hypocritical, but ultimately self-defeating in the absence of remedial action. There is only one planet and its weather systems are both complex and interconnected. Asia matters to all of us.
Mobilising capital at pace and at scale to support and accelerate the region’s energy transition is of the utmost urgency. Yes, we can all play our very modest part in Western Europe but diligently recycling our trash and signalling our virtue by driving $70,000 electric cars is really not going to shift the dial on climate change globally.
Instead, we should be investing in real assets that have real and measurable impact. Already, fund managers in Europe have downgraded more than $140bn in so-called ESG and sustainability-branded products which they fear would leave them vulnerable to regulatory sanctions under the EU’s SFDR reporting regime. Downgrading their classifications from Article 9 to 8, or from 8 to 6 is a tacit acknowledgment that financial assets cannot meet the sometimes exaggerated claims of their sponsors. These funds would be better utilised to meet the pressing needs of the real world and to finance a just and fair energy transition.
Energy policy across the Asia region is framed to attract foreign capital to fund the development of sustainable infrastructure assets. With the public and private sectors working together, long-term contracts, the rule of law, rapid economic growth and sheer demand pressure make this the decade of Asian investment opportunity. For international investors, financing Asia’s energy future has never looked like a more attractive proposition.
In a session titled ‘Shaping the Future of Financial and Monetary Systems,’ yesterday, co-founder and CEO of Circle, Jeremy Allaire shed light on the biggest problems the cryptocurrency and wider financial systems are currently facing.
Speaking to delegates in Davos, Allaire highlighted the existence of an arc, by which these systems journey and end up, where we are currently sit in said arc and what we can expect further on. He said: “For the financial system, we are at an inflection point and moving from the periphery to the core. For example, moving away from the likes of just ‘making access better’ to finally visiting the core of financial system — such as, the nature of money, how distributed and utilised.”
He emphasized that since the credit crisis 10 years back, “we’ve seen growth in alternative architecture,” referring to the likes of blockchain, cloud, cryptocurrencies and stable coins. He also pointed out however that for now, the biggest challenge ahead is regulation and policymaking, comparing some of the sector’s struggles to those of other sectors like media and communications.
Stressing the need to drive policy in line with innovation, he said: “None of us would like to go back to a time where we can’t freely communicate with anyone on the planet without any intermediation with some rare exceptions. We all accept as society, trade-offs. [For example] we have open communications but we also accept the fact that terrorists can recruit people on YouTube. We’re not saying shut down YouTube.”
“The financial system is different to communications and there are identity and risk issues that are real but we have to revisit how those issues are solved — right now it’s the blunt forced mechanism for enforcement which ends up tying to national sovereigns and their policing mechanisms. We have to look for global schemes and technology driven approaches for identity risk that run alongside blockchains and digital currencies,” he said, according to Yahoo Finance.
The rallying call from Nigel Green, founder and chief executive of deVere Group, comes as world leaders, CEOs, academics, influencers and celebrities head to the Swiss mountain resort of Davos for the 50th annual World Economic Forum (WEF), starting Tuesday.
Mr Green comments: “As it celebrates its landmark 50th year, the World Economic Forum 2020 has the opportunity to champion and enhance the transformation of business, which has been dubbed the ‘Fourth Industrial Revolution.’
“We’re living through a pivotal moment in history in which increased and advancing technology is monumentally and profoundly changing the way we live, do business, and interact with one another.”
He continues: “We can clearly see seismic shifts happening in the financial services industry – a sector trade and commerce is deeply reliant upon.
“The vast majority of this change is being driven by financial technology, or 'fintech.' Mobile banking and investment apps, peer-to-peer lending, cryptocurrencies like Bitcoin, robo-advisers, and crowdfunding are all part of this fundamental shake-up of the space.”
Mr Green goes on to add: “The momentum and energy of this evolution now needs to be harnessed by delegates in Davos.
“They need to commit to fintech by using their time, energy and resources for its research and development for three principal, positive reasons.
“First, it benefits society. Fintech can speed up the pace of global financial inclusion. It can provide access to financial services for millions of people who live in remote areas and/or who might normally not be able to use financial services because of historical biases of traditional financial companies. Helping individuals, firms and organizations successfully manage, save and invest can only result in better, stronger and more stable communities for us all.
“Second, fintech offers companies the opportunity to be agile, to diversify, to cut costs, and to meet regulatory requirements all whilst improving the client experience. This will help them thrive in rapidly challenging times of change and disruption.
“And third, the revolution is happening with or without them. As consumers, we increasingly want all our financial services needs to be dealt with online and/or on their mobile devices. We demand personal service and instant access anywhere and at any time. This trend is only set to grow as we all become increasingly dependent on tech.”
The deVere CEO concludes: “Davos 2020 is the ideal forum in which to unite the best political and business leaders to galvanize the positive potential of the fintech revolution.
“With a slowing global economy, it is an opportunity that the world cannot afford to miss.”
This week Chief executive and chairman Larry Fink sent a personal letter to clients stating the firm would be focusing on sustainability as BlackRock's "new standard for investing."
“Climate risk is investment risk...Indeed, climate change is almost invariably the top issue that clients around the world raise," Fink wrote.
The firm, which manages $6.9 trillion for investors all aorund the world, communicated that it would pulling out of any "high sustainability-related risk" investments such as fossil fuels and that it would be including questions pertaining to sustainability as part of its process when building new client investment portfolios.
Fink also stated BlackRock will be weighing in its shareholder vote on many sustainability and climate issues that arise in shareholder decision making.
The CEO's letter also read: “Climate change has become a defining factor in companies’ long-term prospects.
"Last September, when millions of people took to the streets to demand action on climate change, many of them emphasized the significant and lasting impact that it will have on economic growth and prosperity – a risk that markets to date have been slower to reflect.
“But awareness is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.”
In the letter Fink makes reference to climate change as a highly impacting factor in investment models, claiming that this new approach will destroy existing products and create new markets, ridding traditional investments and creating fresh and new opportunities for investment.
“What will happen to the 30-year mortgage – a key building block of finance – if lenders can’t estimate the impact of climate risk over such a long timeline, and if there is no viable market for flood or fire insurance in impacted areas?” he said. “What happens to inflation, and in turn interest rates, if the cost of food climbs from drought and flooding? How can we model economic growth if emerging markets see their productivity decline due to extreme heat and other climate impacts?”
This statement will have significant impact on the proceedings and discussions that take place at the World Economic Forum in Davos next week, as the drive to protect investor value will turn towards climate change and sustainability as key considerations to factor into each and every investment.
It’s the annual event that sets in motion plans for the year and goals for the future, as world leaders and top economy experts meet to discuss priority issues and global solutions, through panels, talks and parties.
This year’s meeting in Davos, like every other year, was full of highly debated topics and drama, with major appearances, like Prince William, and absentees, i.e. Donald Trump. Below Finance Monthly lists the top 5 things about the 2019 World Economic Forum.
Climate change may seem like it was a hot topic 10 years ago, but it’s still very relevant today, as many economic and business decisions revolve around water consumption, global warming and ocean sustainability, according to talks at this year’s event.
Famous TV voice and broadcaster David Attenborough led the talks and screened a new climate focused TV programme, warning that “the Garden of Eden is no more.”
From a business perspective, much of the discussion revolved around the power of social media, in changing companies’ attitudes towards climate change, in the face of reputation damage. During a panel discussion, Burberry (BBRYF) board member Orna Ni-Chionna said: "Things change instantly because of the power of social media…” In reference to Burberry’s recent debacle, she said: "When this was discovered, the social media theme that rocketed to the top was 'Burberry burns.' It took me about five minutes to send an email to our Chief Executive and ... it took our Chief Executive three weeks to have a completely new policy.”
Regarding business in a future full of climate change challenges, Christina Figueres, Founder of Global Optimism had this to say: "I think people are beginning to realise that there is no business on a dead planet."
A second major talking point at the WEF 2019 was the lack of certain prominent figures. ‘No shows’ are a hot topic every year and often reflect the state of crisis being discussed at each event.
This year British Prime Minister Theresa May took an absence, claiming she is “focused on matters here”, i.e. Brexit, which understandably warrants some urgency. The lack of this world leader at such an important global event does however have some impact on the proceedings and talks that go on.
Former US Secretary of State John Kerry replaced Mike Pompeo last minute on a panel, leaving Pompeo to chime in over video conference, in a very Trump-like manner, with issues surrounding populist disruption. He stated: “New winds are blowing across the world. People are asking questions that haven’t been asked or taken seriously for an awfully long time.” In this case, his absence delivered an even stronger sense of urgency to his message.
Fortune reports that thanks to US President Donald Trump’s absence at the event, Brazilian President Jair Bolsonaro took the spotlight, presenting his vision for the future of a “new Brazil.” In his speech, he promised to eradicate corruption, implement privatization of some industries, and turn the tables when it came to his country’s global reputation.
French President Emmanuel Macron, Zimbabwean President Emmerson Mnangagwa, Chinese President Xi Jinping and Indian Prime Minister Narendra Modi were significant absences.
With Brexit, economic tension between China and the US, GDPR and other matters at hand, it’s no surprise the world’s economies are slowing down. This was one of the major talking points at Davos 2019.
On the opening day of the forum, IMF chief Christine Lagarde stated: "The bottom line is that after two years of solid expansion, the world economy is growing more slowly than expected, and risks are rising.”
One of the main points to come out was that following the 2008 financial crisis, banks took unusual and dramatic steps to prevent economic collapse, the impact of which we are experiencing today in the form of slow recovery and a slow reversal of those measures, with still historically low interest rates and little space for manoeuvre. In fact, following a figure of 6% growth last year, the IMF just recently re-lowered its estimates for global economic growth in 2019 to 3.5%.
On top of this are political pressures that make it even harder for banks to respond to the slowdown. Neil Shearing, Chief Economist at Capital Economics, said: "With the global economy likely to slow over the coming quarters, it seems more likely that central banks will continue to come under fire from populist leaders.”
As summarised in this Finance Monthly feature on hyperinflation, Venezuela has been undergoing serious difficulties in the past decade. Hyperinflation has rendered the nation weak, due to political corruption and poor decision-making on the government’s part. In recent news, Juan Guaido has been officially recognised as Venezuela's Interim President, replacing President Nicolas Maduro.
As a consequence, protests ensued across the country, though protests have been ongoing for months if not years now. During the forum, the EU, attempting to defuse the situation, has consequently called for an election to take place. An EU statement threatens that if elections are not called within 8 days, the EU will also recognise Guaido as the Venezuelan President. Maduro immediate response was to expel US diplomats and threaten the same for Spanish diplomats.
According to CNBC, former Venezuelan Minister, and currently a writer and journalist at Davos, Moises Naím said: "Venezuela has a very long road ahead, Venezuela has to be rebuilt, relaunched, rethought, remade…There is no doubt that the behaviour of guys with guns will define much of what will happen in the coming days and shape politics in Venezuela.”
The WEF 2019 couldn’t go by without everyone discussing one of the world’s biggest gamechangers, Brexit. On the lips of almost each and every one of the 3000+ attendees, Brexit is a concern among many in the business and politics world.
As British Chancellor Philip Hammond stood in for his PM Theresa May, his goal was to reassure world leaders and business officials that his government is doing the best it can when it comes to reaching a deal pre-29th March. He emphasized that the consensus on the ‘leave’ vote is that it is still to be respected and implemented, but that a no-deal scenario would not be the best outcome for those who voted ‘leave’ after all. He has since confirmed that a “no-deal Brexit would be 'a betrayal' of the promises made in the referendum campaign.”
In a separate appearance, Mark Carney, Governor of the Bank of England, said in regards to the challenges businesses face against Brexit: “There are a series of logistical issues that need to be solved, and it’s quite transparent that in many cases they’re not…There is a limited amount that many businesses can do to prepare if there are going to be substantial delays on the logistical side.”
Hann-Ju Ho, senior economist for Lloyds Bank Commercial Banking, looks back at the history of globalisation to understand why it was on the agenda in Davos.
Luminaries from across the political and business world gathered last week for the World Economic Forum (WEF) Annual Meeting in Davos, Switzerland,
Although concerns about near-term global economic growth and trade tensions dominated conversations, the official theme of this year’s forum was ‘Globalisation 4.0: Shaping a Global Architecture in the Age of the Fourth Industrial Revolution’.
But what does this mean and why is it expected to be important for the future?
To understand what Globalisation 4.0 means, it’s useful to look back on the previous waves and consider how they have shaped the world we live in.
Technology driving trade
Globalisation 1.0 refers to the rapid growth in world trade, mainly during the nineteenth century.
It was driven by innovations in transport and communications, including the railways, steamships and the electric telegraph.
The subsequent reduction in the cost of global transport enabled the separation of production and consumption across international borders, making previously exotic products like tea, sugar and cotton readily available and affordable in markets like the UK for the first time.
Globalisation surged again after the Second World War – dubbed Globalisation 2.0.
Driven by greater international cooperation, the post-war period saw less protectionism and a rapid growth in world trade, at least in western economies.
The third wave of globalisation is thought to have started around 1990.
Further advances in technology, including the spread of the internet, made it easier for different stages of production to be based in various locations across the globe, leading to the emergence of modern supply chains.
This enabled firms to further cut the cost of producing products and delivering services by moving their operations to cheaper locations, known as offshoring.
However, it’s also likely have contributed towards rising disenchantment, particularly where people in more advanced economies feel that they have not reaped the rewards.
The next wave, dubbed Globalisation 4.0, is set to be driven by the Fourth Industrial Revolution, which is happening right now.
The development of advanced technologies like artificial intelligence, big data, nanotechnology, the internet of things, 3D printing and autonomous vehicles all have the potential to significantly impact global productivity.
Opportunity and inequality
Unlike the previous waves, which have mainly affected goods-producing sectors, Globalisation 4.0 is predicted to have a much greater impact on services.
Unlike the previous waves, which have mainly affected goods-producing sectors, Globalisation 4.0 is predicted to have a much greater impact on services.
And we live in an increasingly connected world, so the speed of its adoption may also be faster than in previous waves.
Attendees at Davos not only discussed the opportunities that Globalisation 4.0 is expected to create, such as increased productivity, but also considered the growing evidence of a backlash against globalisation.
The WEF could be regarded as the ultimate representation of globalisation, so it is no surprise that meeting the challenges this latest wave of economic change brings for individuals and society were high up on the delegates’ agenda.
HTC VIVE, the leader in room-scale Virtual Reality (VR), last week at the WEForum announced ‘VR For Impact’, a $10 Million program to drive VR content and technologies that will create positive impact and change in support of the United Nation's Sustainable Development Goals by 2030.
Virtual Reality provides a tremendous opportunity to develop and share ideas in impactful ways that lead to change, and through VR for Impact, HTC Vive will fund and support content and technologies that create the most powerful experiences to transform our world.
The United Nation's Sustainable Development Goals are a universal call to action to end poverty, protect the planet, and ensure that all people enjoy peace and prosperity. Virtual Reality's ability to immerse people into an experience is unmatched, and VR can drive the world to act on global issues the human race is facing. Through VR for Impact, HTC Vive is committing $10 million dollars to industry partners and content developers to create experiences that improve awareness, education, and lead to action.
"The potential for Virtual Reality to help us learn, understand, and transform the world is limitless. VR for Impact is a challenge to the VR community and content developers across the globe to help drive awareness and to solve the biggest challenges of mankind," said Cher Wang, Chairwoman and CEO, HTC. "HTC Vive will fund the best ideas using Virtual Reality that truly drive awareness and positive change in our world. We encourage all players in the VR eco-system to join as only together can we drive real impact."
"HTC is a pioneer in recognizing the work the UN has done to promote social change through virtual reality," said Gabo Arora, Creator of the UN's VR Initiative and Creative Advisor to the World Food Programme. "The Vive's room-scale VR capability can be a powerful tool for immersive storytelling, education and training; their support will empower more people to affect global change, give voices to the most vulnerable and provide access to new possibilities for the most marginalized."
"There are millions of untold stories in every crisis, especially on the front lines where much of our work takes place," said Corinne Woods, Director of Communications for the World Food Program. "HTC's support of new ways to tell important stories, and help in shaping innovation for the UN's sustainable development agenda, will build on the impact of our work and take it in new and exciting directions."
(Source: HTC Vive)
Though the US’ 45th President, Donald J. Trump stole the headlines last week, Alpine resort Davos saw a sweep of discussions, announcements and interesting statements come from this year’s 47th World Economic Forum.
Here below we have picked out some of the top highlights from the four-day annual forum.
US-China Trade War
Keynote speaker Chinese President Xi Jinping opened the forum stating that “Protectionism is like locking yourself in a dark room, which would seem to escape wind and rain, but also block out the sunshine…No one is a winner in a trade war.”
Jinping and other Chinese spokespersons, throughout the forum, set out a strong position, a warning even, against Trump's intimidations to start an American trade war against China.
Chairman of Ali Baba stated at the forum that a trade war between the US and China would be disastrous, and that he would do all he could to prevent it. "I think that China and the US should never have a trade war, will never have a trade war, and I think we should give President-elect Donald Trump some time - he’s open-minded, he’s listening," Ali Baba’s Chairman said in a speech.
AIi Baba executives also announced the signing of an Olympic sponsorship deal and provoked the US on its concerns towards its military rather than prioritizing infrastructure.
Europe & Brexit
On topics of European politics, and their effect on global economic matters, delegates met to discuss, and thereafter agree or disagree, on how political shifts, due to ground-gaining anti-establishment political parties, can be addressed by institutions.
Brexit was of course a big talk at the forum; in the UK Prime Minister's attempt to woo London’s banks, describing the institutions as a “huge value” to the economy despite their announcements of accelerated action in transferring executives to the EU, May shifted her Brexit priorities towards financial services in the UK capital. She said: “I value financial services in the City of London, and I want to ensure that we can keep financial services in the City of London… I believe that we will do just that.”
Additionally, the UK PM was confident in portraying post-Brexit Britain as a champion in free trade, claiming that “The UK will step up to a new leadership role as the strongest and most forceful advocate for business, free markets and free trade anywhere in the world.”
An interesting comment came from Sergio Ermotti, CEO of the UBS Group AG: “2017 will be a very challenging year for Europe…You see what's going on with Theresa May (and Brexit) but also, we have elections coming in Holland, most likely it's going to come out that the Populist party will have a relative majority. You will see France elections, you will see German elections, Italian elections and they are all pointing out to a lot of divide within the EU on how to tackle these issues."
On the other hand, much discussion also surrounded the inauguration of Trump, populist politics and business confidence on the back of his intentions… and tweets.
“I think that these very rational people will be very thoughtful when they go about the actual policy,” said Jamie Dimon, CEO of JPMorgan Chase & Co., discussing the need to focus on Trump’s cabinet nominees, rather than worrying about his one-line tweets.
Dimon told reporters he was not concerned about the US’ future and its effect on the world’s economy, given that the real estate magnate and TV star has enlisted “very serious people” for the new US administration.
Though financially, many were on the fence in discussions surrounding Trump’s intentions in relation to finance, Wall Street’s high flyers spoke about being confident that the incoming administration will relax regulatory limits on financiers, though they are not counting on the new President to overturn Obama’s Dodd-Frank Act (2010).
On the last day, a discussion took place as to whether populist politics can be positive for the global economy, markets and moving onward. Both the election of Trump and Brexit were prime examples used to define whether populism is a detriment to economic affairs or not, and one of the overall conclusions that can be taken from the discussion was that Trump and similar scenarios “will be disruptive and bring the economy forward,” (Indian billionaire Anil Agarwal).
This however, was not a majority opinion shared by all, and has been an ongoing debate through various speeches at the forum. Philip Jennings, General Secretary of the UNI Global Union said: “I think Donald Trump is going to turn out to be the betrayer in-chief. If you look at the people that he’s surrounded with, there’s not one of them that’s got the working man’s interest at heart.”
But again: “In Davos, I’ve got the impression that the Trump election is being interpreted as thoroughly positive in economic terms,” stated Swiss Finance Minister Ueli Maurer to reporters on the final day.
Technology, Motoring, Climate Change and R&D
But of course, politics did not dominate the forum necessarily, leaving ample space for tech and manufacturing companies to make announcements and analyses.
Toyota Motor Corp. Chairman Takeshi Uchiyamada, says that due to the need for further infrastructure, fuel-cell automobiles will eventually become popular, but it will take much longer than it took gasoline-electric cars to gain status.
“The hybrid sold much faster than we had anticipated…as for the FCV cars, we assume it won’t be as fast as hybrid as the infrastructure needs to be prepared before it becomes major in the market,” he told Bloomberg.
Co-founder of Alphabet Inc., Sergey Brin said in a speech that the company was one of the biggest spenders on AI in the world as of late, stating that the boom in uses of AI technology “has been very profound, and definitely surprised me even though I was right in there and could throw paper clips at them."
Much of his speech revolved around advances in AI technology, their application to a variety of segments from law to manufacturing, the threat of job eliminating and further shifts in society. He says it is a priority now to focus on the “inherently chaotic” tech steps and how the world must adapt appropriately.
Another hot topic during the week was climate change. Campaigners are worried the US’ new administration will be the demise of fresh policies, action and protection. Norwegian Prime Minister Erna Solberg spoke on behalf of the many in stating that Trump may very well not implement the Paris agreement, which aims for nations to keep global warming levels “well below” 2C. Many activists said their prime focus now is on Trump’s moves and how they might affect global climate concerns.
On top of these developments, the Gates Foundation also announced the joining of a global coalition for vaccines, against infectious diseases worldwide, the Coalition for Epidemic Preparedness Innovations. Starting off with a funding of $460 million from the Wellcome Trust, Germany, Japan, Norway, and now the Gates foundation, the coalition aims to develop and deploy vaccines in record times to curb the spread of global diseases.
And finally, the entire forum itself went to prove to the world the gigantic advent of drone technology, in the form of security. Across the Davos resort, security staff were armed not only with counter-human measures, but also with anti-drone technology. Dedrone, a leader in said technology, provided the personal with a drone defence system. Police in the Canton of Graubünden then used the system to monitor critical airspace above the resort area in real time.
This week Finance Monthly heard from Jim Prior, CEO of The Partners, on his take from the World Economic Forum 2017 in Davos, which took place last week.
If you’ve invested the unavoidably large amounts of public or private money required to get to Davos the general rule is that you can't just sit back with a glass of Kirsch and take in the elite view. You need to be seen to be doing something by those who funded your trip.
The formula for that in recent years has been simple: gaze through the telescope at the real world, identify some problems with it, then loudly and publicly promise to fix them just as soon as you get back home.
However, this year seemed decidedly quieter than before. Fewer predictions, fewer promises. This year’s snow put a hush on Davos and, back in the real world, one might not have noticed that it had happened at all.
This was a year more of frostbite than soundbite. Attendees appeared to be conscious of their failure to fix, or even identify, society’s biggest problems so they stayed silent on them. No-one seemed clear on what story there was to tell, so no real story was told at all.
Even the commentary around the unavoidable subjects of Brexit and Trump was inconclusive. “We failed to predict them and we don’t know what will happen”, was the general summary – leaders seemed unwilling to take responsibility for a future they had not expected to find.
So, on the whole nothing happened at Davos. Which might be fine if nothing had happened in the real world. Which, like Davos, couldn’t be further from the reality in which we live.
Swiss Alpine resort, Davos, is set to see another flock of economy specialists worldwide meet for the World Economic Forum 2017 beginning 17th January, which will be covering in-depth globalization, the US election, big data, and leadership priorities for the year.
The year’s WEForum is titled "Responsive and Responsible Leadership,” stating that “more than ever, leaders need to share insights and innovations on how to best navigate the future,” and has established that the leadership priorities for the year include the Fourth Industrial Revolution, on the back of technology advancements; the need for a dynamic, inclusive, multi-stakeholder global-governance system via public-private collaboration; the restoration of global economic growth; the reform of market capitalism, and rebuilding of the compact between business and society; and finally “leaders will need to address the pervasive crisis in identity formation that has resulted from the erosion of traditional norms over the past two decades.”
President Xi Jinping is set to become the first Chinese head of state to lead the WEForum, and he will be joined several formidable co-chairs: CEO of Royal Philips Frans van Houten; Sharmeen Obaid-Chinoy, documentary filmmaker of SOC Films; Meg Whitman, President and CEO of Hewlett Packard Enterprise; Brian T. Moynihan, Chairman of the Board and CEO of Bank of America Corporation; and Helle Thorning-Schmidt, CEO of Save the Children International.
Germany’s Chancellor, Angela Merkel, called for urgent fiscal reform in Europe at a special session at yesterday’s World Economic Forum Annual Meeting. Whatever the decision of the European Central Bank (ECB) on quantitative easing, she said that European leaders must not be diverted from continuing with meaningful structural reforms.
“Time is of the essence,” she said. “Every day we delay is a lost day. We need to promote growth and create long-term jobs.”
Europe has an opportunity to emerge stronger out of the crisis, the Chancellor said. While acknowledging progress by countries such as Italy, Spain and France, she stressed that Europe is not out of the woods yet. “The European single market needs to become less regulated and more open.”
The growth-austerity argument is a false dichotomy, she added. “Germany has shown that growth-oriented fiscal policy is possible,” she said. Pointing to internal demographic challenges, Merkel emphasized the need to manage debt levels to ensure that onerous burdens are not passed on to the next generation as six million German workers enter retirement age.
Merkel called on other European leaders to begin fiscal consolidation. She pointed to historic low interest rates and questioned how countries with large fiscal deficits will fare if rates rise. “Now is the time to get our houses in order,” she said.
The Chancellor added that Europe needs to grasp several immediate opportunities. The first is for more open trade via the Transatlantic Free Trade Agreements. The second is for Europe to become a standard-setter globally in digitization
On Greece, she emphasized that Germany’s actions have always been oriented towards keeping Greece in the Eurozone. “We have to both show solidarity with Greece just as they show readiness to shoulder their responsibilities.”
Merkel concluded by affirming Germany’s position in Europe. “Germany will remain a stable anchor in Europe,” she said.
Ministers, industrialists and academics from the BRICS countries delivered a strong message of long-term potential economic growth for their countries at a panel session at yesterday’s World Economic Forum, in Davos, Switzerland. The message was clear – BRICS nations are ripe for investment, and will continue to be provided their governments successfully implement planned structural reforms.
“We continue to invest in all these countries, because we invest not for the next two or three years, but for the next 10 or 15 years,” said Carlos Ghosn, Chairman and Chief Executive Officer, Renault-Nissan Alliance, France. Ghosn emphasized that despite the adjustments currently taking place in the BRICS countries, they are all capable of strong growth.
Justin Lin, Professor, National School of Development, Peking University, People's Republic of China, said that China would have to depend less on exports and more on domestic consumption and investment, but the government’s strong balance sheet and high private savings will facilitate this transition. “I am confident that China will be able to maintain a 7% growth rate over the next five or even 10 years. China will continue to be an engine of world growth,” Lin said.
Arun Jaitley, Minister of Finance, Corporate Affairs and Information and Broadcasting of India, said India intended to return to an 8%-9% growth rate. Jaitley said the recent change in government has led to clarity about the path forward and a changed mindset, inside and outside the country. “The world is looking at India again,” he said. Lower oil prices are helping India’s current account balance and bringing down inflation, he added at exploresurvey.com/beverage.
“Russia will have to learn how to live with more moderate oil prices,” Alexei Kudrin, Professor and Dean, School of Liberal Arts and Sciences, Saint Petersburg State University, Russian Federation, told participants. Kudrin said lower prices were obliging Russia to make structural reforms and diversify its economy in a way that would benefit the country in the long term.
Marcelo Côrtes Neri, Minister of Strategic Affairs of Brazil, said Brazil is returning to the “middle path” it had originally begun in 2003: a combination of redistributive social programmes and market-friendly economic policy. He added that the country’s recent slow growth has not prevented impressive social achievements. “In Brazil inequality has fallen, and fallen sharply, since 2001,” he said.
South Africa too is taking concrete steps to rebalance its economy while maintaining strong social programmes, Nhlanhla Musa Nene, Minister of Finance of South Africa, said. Nene said the government is working to improve the environment for the private sector, to make the public sector more efficient, and to make the government more accountable to its citizens. Fiscal restraint is needed at present, but “we will continue to develop infrastructure and to protect the poor”.