Petro Poroshenko, President of Ukraine
President Petro Poroshenko of Ukraine told participants at the World Economic Forum Annual Meeting that despite the aggression his country faces, Ukraine is strong and unified. “Ukraine has become stronger. Ukraine has become more democratic. And Ukraine has become more European,” he said.
In a special session on The Future of Ukraine, held yesterday at the Annual Meeting, Poroshenko said that last year’s presidential and legislative elections were free and fair. He added that these elections showed a highly unified country, while polls indicate that support is stronger than ever for the country’s territorial unity and for integration with the European Union.
Poroshenko said that last year was “the most difficult in our history”, with parts of the country occupied by foreign troops. However, he also saw strong motives for optimism that peace can be achieved. He noted that shelling has fallen dramatically since a December agreement that called for “artillery silence”.
Poroshenko asked for the international community to continue its support of Ukraine, with political solidarity, with economic aid, and with the provision of defensive military technology. “We are not only fighting for our territorial integrity and independence, we are fighting for European values,” he said.
Ukraine is fully committed to economic reform, Poroshenko said. “We want to create a new country, free from corruption, with independent courts and the rule of law. We want to build a new climate for investment.” The country is already cracking down on corruption with a new anti-corruption bureau, and it is reducing bureaucracy. It is working to achieve energy independence from Russia through a mix of conservation, new suppliers and a clear, transparent energy market that will increase domestic shale gas production.
Poroshenko said that in Davos he has received several promises of major investment, as well as many expressions of support for his country. “I am thankful for this support. It is what Ukraine needs,” he said.
The Confederation of British Industry (CBI) is calling for delegates at this week’s World Economic Forum in Davos, Switzerland, to focus on global issues and work to kick-start the world economy.
Rain Newton-Smith, Director of Economics, CBI, speaking at the event, said: “As we dig out our snow boots and warm coats, and prepare to join the World Economic Forum's Annual Meeting in Davos, now is a time to focus our minds on global issues. We're a few years into the global recovery, but the benefits are not being felt by everyone. Youth unemployment is over 50% in Spain and Greece. And in many of the advanced economies, while employment growth has picked up, real wage growth is lagging behind. Households aren't feeling an improvement in their pockets,” she said.
According to the CBI, the UK is now enjoying a healthy recovery, with growth of around 2.5% expected this year; and employment in the UK now stands at 30.8 million, a record high. But at the same time, the average household has seen its income drop by 6% in real terms since the financial crisis.
“The key to addressing this is to improve productivity and skills, so companies can grow faster and pay their workers more. In the UK, while job growth has been strong, productivity growth has fallen 15% below its pre-crisis trend. There's an urgent need to raise productivity, which is a crucial part of addressing living standards and promoting sustainable growth. Improving productivity is not just a UK issue but a global one - with slower but more balanced growth, China will need to keep focusing on innovation as it moves to a more services-led economy with the urban consumer at its heart,” Ms Newton-Smith remarked.
CBI says that the focus on productivity needs to go hand in hand with improving skills. As the new wave of innovation hits, jobs are becoming more skilled. By 2022, half of all jobs in the UK will need workers who have some form of higher education. As such, businesses need to focus on helping their people build careers.
Innovation is higher in more open economies, according to 2013 research by the Centre for Economic Policy.
“Countries grow fastest when they trade with and learn from one another. There's no doubt that China's phenomenal growth has been driven, in part, by its ascension to the World Trade Organisation and its success in moving up the value added chain,” said Ms Newton-Smith.
“With several large trade deals on the global agenda, there is a real opportunity to boost growth for everyone. An ambitious Transatlantic Trade and Investment Partnership could boost the UK economy alone by £10 billion (€13 billion) every year. Reducing tariffs and boosting trade in services has tremendous potential. It's important that we seize the opportunity and get the global economy kick-started.”
Italy’s Prime Minister, Matteo Renzi, called for politicians around the world to seize the day and tackle complex risks head-on, at today’s World Economic Forum, taking place in Davos, Switzerland.
“Not to see the risks is stupid for a politician, but the transformation of risks into opportunities is the quality of leadership,” he said. “The economy is important, but without political leadership, we are not in a condition to invest in a different world.”
The Prime Minister acknowledged that new risks abound, but he said that if leaders around the world can invest in the future “not as a problem, but as an opportunity, it will resonate with a very important message – carpe diem”. He told participants that new reform in Europe is important and that a key point for a “new Europe” is the idea of a future focused on the ability to invest in the new generation and not simply to maintain the traditional approach where the future is a problem.
According to Mr. Renzi, Europe’s economic direction needs to change. “At the G20 summit in Brisbane last November, every country spoke about the need to invest in growth,” he said. “Europe and the Eurozone spoke only about austerity. It is important to pay attention to budgets, but it is also important to invest in a new relationship with citizens.”
The next 12 months are critical, Mr. Renzi said. “Europe must eliminate the red tape of bureaucracy or it will be finished.” European Commission President Jean-Claude Juncker’s massive investment plan to boost jobs, growth and investment, announced last November, must be implemented. Renzi also pointed to “the new role” for the European Central Bank, which is expected to unveil a plan this week to boost the Eurozone’s flagging economy.
Business leaders gathered in Davos for the 45th World Economic Forum Annual Meeting have called for structural reforms to the global economy to encourage growth.
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.”
Diminishing financial returns for utilities have put at risk the ability of the electricity sector in OECD markets to raise the estimated $7.6 trillion (€6.5 trillion) in investments needed by 2040 to meet energy policy objectives, according to a new report from the World Economic Forum. This investment is needed to simultaneously decarbonise the sector while maintaining energy security.
The Future of Electricity report offers guidance on transforming the electricity sector to a more sustainable, affordable and reliable system, and outlines recommendations for policy makers, regulators and businesses in developed markets to attract needed investment. It is part of a broader Future of Electricity initiative, which was launched at the World Economic Forum Annual Meeting 2014, and aims to provide countries, companies and societies with a platform for dialogue and learning amid the transition to a lower-carbon electricity system.
“Since 2000, OECD countries have invested more than $3 trillion (€2.6 trillion) in new renewables, conventional power plants and distribution structure, but about 20% more investment a year is still required over the next 15 years,” said Roberto Bocca, Head of the Energy Industries at the World Economic Forum. “Collaboration across stakeholders will be critical to achieving this goal and providing the holistic perspective needed to successfully make the low-carbon transition.”
“The electricity sector is at a crossroads. We are entering a period of unprecedented investment to meet our energy policy goals, but decreasing returns and increasing risk are raising questions over future investment,” added Julian Critchlow, a partner at Bain & Company, which collaborated with the Forum on the report. “OECD countries will need to take immediate action to ensure continued investment across the energy value chain.”
According to the report, root causes of the sector's investment challenges include:
- Suboptimal geographic deployment: Europe could have saved up to $140 billion (€120 billion) if deployment of renewables had been optimised within and across borders; for instance, by building more solar in southern Europe where there is more sun, and more wind farms in the north where wind factors are higher.
- Lack of buy-in: Society recognises the need for an electricity system that produces less carbon, but has not yet fully bought into the value it brings and other positive impacts like job creation and security of supply.
- Inadequate carbon price signalling: In the EU, the Emission Trading Scheme permits have fallen to a price that will not materially impact investment consistent with a decarbonisation programme.
- Declining returns of conventional generation: Falling demand, significant overcapacity, reduced load factors and wholesale price declines have all contributed to a massive loss of value in generation assets.
- Business model disruption: The traditional utility business model is being disrupted by technological innovation and customer trends at the end of the value chain, creating opportunities for new entrants and incumbent utilities.
Over 40 heads of state and government, as well as 2,500 other leaders from business and society will convene at the 45th World Economic Forum Annual Meeting, from 21 to 24 January 2015 in Davos-Klosters, Switzerland, to discuss The New Global Context.
This context consists of 10 global challenges affecting the world today: environment and resource scarcity; employment skills and human capital; gender parity; long-term investing, infrastructure and development; food security and agriculture; international trade and investment; future of the internet; global crime and anti-corruption; social inclusion; and future of financial systems. Current affairs, such as the escalating geopolitical conflicts, pandemics, diverging growth and the new energy context are on the agenda as well.
“The World Economic Forum serves the international community as a platform for public-private cooperation,” said Klaus Schwab, Founder and Executive Chairman of the World Economic Forum. “Such cooperation, to address the challenges we all face, is more vital than ever before. But it requires mutual trust. My hope is that the Annual Meeting serves as the starting point for a renaissance of global trust.”
