Forecasts predict faster global growth this year, but the economic crisis will continue to echo in the mountains surrounding the Swiss resort of Davos, as leaders at the World Economic Forum (WEF) meet this week to discuss just how stable the recovery is.
The World Bank last week projected the global economy would grow at 3.2 per cent this year, up from 2.4 per cent in 2013, but International Monetary Fund chief Christine Lagarde warned that “ >this crisis still lingers .” Lagarde, a WEF board member, will join the more than 2,500 business leaders and politicians from developed, emerging and developing countries meeting from Wednesday to Saturday for their annual Davos get-together.
WEF founder Klaus Schwab said ahead of the event that this year’s meeting was taking place amid “cautious optimism, diminished expectations and many known unknowns.” One unknown factor this year is the effect of the US policy of gradually reducing its bond-buying stimulus programme.
Washington is sending Treasury Secretary Jacob Lew, Commerce Secretary Penny Pritzker and Trade Representative Michael Froman to Davos to explain these and other US policies in several panel discussions.
Many leaders come to the WEF not only for the official events but for the specific opportunity of meeting personally with their counterparts from around the world.
Trade Representative Froman is no exception. He is scheduled to meet EU Trade Commissioner Karel De Gucht in Davos to take stock of the US-EU talks on a free trade agreement.
This year’s WEF agenda is no longer dominated by debates on how to rescue Europe from imminent doom, but by discussions focusing on the solidity of the bloc’s recovery, national deficits and the EU’s global competitiveness.
British Prime Minister David Cameron, his Italian counterpart Enrico Letta and German Finance Minister Wolfgang Schaeuble are among the European heavyweights who are expected to discuss these issues.
But Davos, of course, does not only look to the West.
Japanese Prime Minister Shinzo Abe will deliver a keynote speech, little over a year after he took office and introduced his “Abenomics” policy aimed at reviving his country’s economy.
Global businesses and governments, including those represented in Davos, have been wondering how Abe will bring about the structural reforms of the ecomony that he has promised as part of the policy package.
Global leaders at the event should also focus on emerging countries such as China, India, Russia and Brazil, the WEF’s Schwab said.
“We see signs of a so-called midlife crisis in the economic growth of emerging markets,” he said, pointing to the difficulty of keeping growth rates high, once such countries have reached a certain level of prosperity.
The WEF’s organisers also poll hundreds of managers and economists each year about the biggest perceived global economic risks that dominate the Davos debates.
The results showed that fiscal crises in important economies as well as failure of major financial institutions are still among the greatest concerns, along with high unemployment, large income gaps or climate change.
Current serious efforts to ease major political risks to the world economy also spill over to Davos this year, including Iran’s nuclear programme, the Syrian civil war and the Israeli-Palestinian conflict.
Israel’s President Shimon Peres and Prime Minister Benjamin Netanyahu, and Iran’s President Hassan Rowhani and Foreign Minister Mohammad Javad Zarif, are set to attend, just days after Tehran starts implementing an international nuclear deal.
The Syrian peace talks also start in the Swiss town of Montreux on Wednesday. US Secretary of State John Kerry and UN Secretary General Ban Ki-moon are among several leaders who said they would also make it to Davos.