Main issues at the World Economic Forum’s (WEF, 16-20 January) are aimed at providing “cures” to the global socio-economic issues, including present military conflicts, difficulties in international trade and failures to effectively tackle climate change, etc. The theme of the 53rd annual meeting during is “cooperation in a fragmented world”; it brings together 2,700 leaders from 130 countries including 52 heads of state/government.
The WEF-annual meeting is one of the remaining vestiges from a time when leaders were enthusiastic that growing economic interdependencies would help the world overcome poverty and conflicts, quite a “melting idea” as Politico noted. However, some die-hard optimists are still fighting to save the idea that globalization can be a “good force”, e.g. led by German Chancellor Olaf Scholz, the only G7 leader who has agreed to attend this year. Among participants are also 56 finance ministers, 19 central bank governors, 30 trade ministers and 35 foreign ministers.
It seems that the WEF’s “operating model” is still alive: i.e. to provide a place for the world’s most influential people to discuss most vital global issues. Business, however, lost interest in WEF: in 2020 there were about 120 billionaires joining the forum; much less this time, which is however a strong reminder about the differences between elites and the general public.
The WEF speakers include 42 percent female, with the overall female participation at 27 percent, which are new “high figures” for the WEF’s summits.
European continent still supplies the biggest part of decision-makers and politicians in Davos, while the US has the biggest part of corporate and business participants, nearly 20 times the size of the Chinese delegation.
Among the high-fly guests are: the UN Secretary-General António Guterres, European Commission President Ursula von der Leyen (and several Commissioners), China’s Vice Premier Liu He, Donald Trump’s son-in-law Jared Kushner, Dell Technologies founder Michael Dell, Goldman Sachs chief David Solomon, former US Vice President Al Gore, former UK PM Tony Blair, European Central Bank chief Christine Lagarde, IMF chief Kristalina Georgieva, South African President Cyril Ramaphosa, European Parliament President Roberta Metsola, Polish President Andrzej Duda, Spanish Prime Minister Pedro Sánchez, Irish Taoiseach Leo Varadkar, FBI Director Christopher Wray, US Labor Secretary Marty Walsh and the US Trade Representative Katherine Tai.
Global Risks Report-2023
Just published WEF’s Global Risks Report identified the cost-of-living crisis as the biggest short-term risk to the economy. In the beginning of 2023, the world is facing a set of risks that are familiar to the leaders, as well as some completely new: among the “older risks” are inflation, cost-of-living crises, trade wars, capital outflows from emerging markets, widespread social unrest and geopolitical confrontation (with a danger of nuclear warfare, which a few of business leaders and decision-makers have already starting to experience).
Among comparatively new developments in the global risks are the following: unsustainable levels of debt, low growth patterns, low global investment and de-globalization, a decline in human development after decades of progress, rapid and unconstrained development of dual-use (civilian and military) technologies, and a growing pressure of climate change impacts and ambitions in an ever-shrinking transition efforts to 1.5°C level.
These “new developments”, according the report, are “shaping a unique, uncertain and turbulent decade to come”.
Besides, “biodiversity loss and ecosystem collapse” is viewed as one of the fastest deteriorating global risks over the next decade, and all environmental risks feature in the top 10 risks. Nine risks are featured in the top 10 rankings over both the short and the long term, including “geo-economics confrontation”, “natural resource crisis” and “erosion of social cohesion and societal polarisation”, alongside two new entrants to the top rankings: “widespread cybercrime/cyber insecurity” and “large-scale involuntary migration”.
Reference and citations from: https://www.weforum.org/reports/global-risks-report-2023/digest
Main WEF issues in the discussions
During five days of discussion, at least five major items are under radar:
= One of the main issues in the agenda is dealing with an expected global recession in 2023 as a result of geopolitical and socio-economic turmoil resulting from the war in Ukraine coupled with crippling inflation. In order to avoid the worst possible scenarios, heads of government and central bank governors will face an inevitable dilemma of whether to spend more money on their citizens to shield them from the biting cost of living crisis or hike interest rates to fight inflation which in turn risks unleashing a global recession.
= The ongoing global “conflict of interests” remains to be a pressing WEF’s issue, generally because its implications for global security, defence policies, energy resource and supply, food security and extended production. Concerning the state of global economy, consumer sentiment improved in 31 out of 43 countries surveyed by some experts; but CEO of Morning Consult Kyle Dropp shared new Index of Consumer Sentiment data with Davos Playbook, which shows that roughly two-in-three of the world’s largest economies still have negative views toward the state of the economy and their personal finances; the European countries are at the bottom of the list.
= As to climate change, WEF’s “Global Risks Report” published recently, noted that a failure “to mitigate climate change was ranked as “one of the most severe threats in the short term”. A vital topic around climate change during 2023 would be the process of decarbonisation industrial polices and the energy transition. Particularly pronounced topics in this regard are: increased investments in innovative technologies, in more sustainable energy/fuel sources and “green” hydrogen, to name a few.
= The loss of biodiversity, extreme weather calamities and increasing number of natural disasters are the issues vital for resolving global problems, including food security and climate crisis. Growing food shortages have a “triple threat” of food, energy and fertilizers shortages. Experts are already warning that more people will face hunger in 2023 than the previous years as food prices continue to spike, shortages bite deeper and more livelihoods are decimated, resumed the WEF’s website.
= Global technological advancements are increasing interconnectivity, as well as advancements in areas such as artificial intelligence and quantum computing, which are the main guidelines for national governance around the world. However, most governance bodies are choosing to take a more localised approach to the “technological revolution”, specifically concerning involved national security issues. However, with multiply crises and challenges, such as digitalisation and climate change, military conflicts, energy security, cybersecurity, etc. a more “globalist approach” is needed to unlock the potential of innovation to help solve greatest present global problems.
= Some experts say that “protectionism is back”: WEF economic analysis has shown that “governments plowing money into their domestic industries”, while trying to reduce dependencies on other countries in strategic industries. For example the US government brought about $370 billion in the national clean energy incentives by the Inflation Reduction Act, IRA. These actions have infuriated governments in the EU and Asian states; thus, the EU is planning to revise its own subsidy limits (and state aid) . Hence, WEF’s participants will discuss some important issues involved in “the new globalization”, such as “legal subsidies”, export controls and economic self-sufficiency.
References and citations from: https://www.euronews.com/next/2023/01/16/davos-2023-the-5-key-talking-points-set-to-dominate-the-agenda-at-this-years-world-economi?utm_source=newsletter&utm_medium=EN_TESTMay&utm_content=davos-2023-the-5-key-talking-points-set-to-dominate-the-agenda-at-this-years-world-economi&_ope=eyJndWlkIjoiNDRiMzY0NjdmYjM0NTZmOGRjZTc3YjgyZjdmODY3MzgifQ%3D%3D
European views on cooperation
In the opening address to WEF, Commission President underlined several ways to prosper EU in the global cooperation:
First, shifting to more targeted and efficient fiscal support measures to deal with the impact of the energy shock, while fazing them timely and gradually. There are great opportunities in the short term, as energy prices are down and in several countries adequate measures are taken in view of social consequences of the decisions.
Second, the EU member states are pursuing reforms and investments through the Union’s recovery-resilience package and the NextGenerationEU program; both are specifically aimed at reducing European dependence on imported fossil fuels through REPowerEU plan.
Third, the EU institutions have achieved “a swift agreement” on reforming the European-wide socio-economic governance. For example, some discussions took place in the 20-states-euro area and ECOFIN concerning such reforms; swift implementation of reforms is vital for markets, investors and citizens in the member states.
Fourth, the EU is taking decisive steps to safeguard European competitiveness, streamlining state aid rules and procedures, while avoiding fragmentation of the European single market, including through the establishment of a European Sovereignty Fund.
Finally, the EU leaders discussed the issues of the “digital euro”; the Commission intends to present legislative proposals on the digital euro in the second quarter of 2023. In the meantime, the EU institutions and the member states will work closely with the European Central Bank, ECB to support its work in the investigation phase.
Source: Commission press release at: https://ec.europa.eu/commission/presscorner/detail/en/STATEMENT_23_246