Davos starts with worries over world economy
The risks of an uneven global economic recovery dominated the agenda today as the World Economic Forum opened in the Swiss Alps.
The five-day gathering of the rich and powerful was assessing a host of issues, from disaster aid in the aftermath of Haiti’s earthquake to reforms aimed at preventing another financial collapse.
But the most pressing concern was steadying a shaky world economy that is likely to face tough challenges in 2010 as unemployment in the rich world remains high and governments are forced to pull back from lavish bailouts and stimulus packages that have propped up banks and other industries.
“China alone cannot be the only engine of global economic growth,” warned economist Nouriel Roubini, who gained prominence as a forecaster of the current economic crisis. “In the first half, you are going to see the effects of the fiscal stimulus ... in the second half of the year you will see a fall in the US, Europe and Japan.”
Around 2,500 participants – from presidents and chief executives to philosophers and artists – will debate economic recovery, job creation and the way forward in the Swiss resort.
In the past Davos has often been a key site for diplomacy, but the focus of this year’s meeting was clearly the economy and how to rebound from record unemployment.
The UN labour agency said 27 million people lost their jobs last year, with almost half of the losses in North America, Japan and Western Europe. The agency predicted an additional three million people in the rich world could lose their jobs or fail to find employment in 2010.
Dennis Nally, global chairman of PriceWaterhouseCoopers, said he was “cautiously optimistic” about growth this year. But, he warned that a number of problems remained, not least the stubbornly high unemployment in the United States and other industrialised economies.
“It’s not a robust recovery from a job creation standpoint,” he said.
But for emerging economies the mood was mostly positive. While there was concern about an over-reliance on these new engines of growth, Mr Nally suggested that China and India no longer be included among their ranks.
“It’s a little bit unfair to call China an emerging market, India an emerging market and they’re in the same category as Chad or Mozambique,” he said. “In 2014, the GDP of the emerging markets will surpass the GDP of the developed markets. Some of these countries have emerged already. We should come up with a better term.”
