The World Economic Forum’s final panel concluded that the year ahead is looking better for the global economy than feared, but remains fraught with risks, including an escalation of the conflict in Ukraine and the emergence of a transatlantic trade war.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva told the Davos audience that what had improved was the potential for China to boost growth and that the IMF now forecast Chinese growth of 4.4% for 2023.
While the coming days were likely to prompt the IMF to upgrade its current forecast of 2.7% growth for the coming year, it cautioned against expecting any “dramatic correction” on that figure.
One risk associated with China’s reopening, with the potential to heat up global demand and energy prices, was that it triggered a new wave of inflationary pressures once the contagion reached its peak.
The week-long meeting debated the ongoing dispute between the United States and Europe over subsidies for the green energy transition, the looming debt crisis in developing countries and the geopolitical risks that abound around the planet.
“My deep concern is clearly the war in Ukraine,” French Finance Minister Bruno Le Maire told the panel, warning that an escalation was possible, while also arguing that it had taken a step back in its resolve to support the EU. Was inspired to become a political force. Ukraine.
Le Maire, who is involved in efforts to resolve a dispute with Washington over $369 billion over state-subsidized climate change, which Europe calls anti-competitive, said the plan was designed to support similar efforts around the world. Must be compatible.
“The important question is not China first, America first, Europe first. The important question for all of us is climate first,” said Le Maire, who will meet with German officials in the coming days to discuss possible changes to the US plan. Will travel to Washington. ,
Former US Treasury Secretary Larry Summers said the Biden administration subsidy package and planned effort by Europe to tackle climate change at least represented a long overdue step of activity on the green energy transition.
“A subsidy war about too much of a good thing is good,” he told the panel. “It’s a very healthy kind of competition relative to all the competition the world has seen,” he said, urging fair competition that “doesn’t wallow others in and try to drag others down”. .
Wall Street executives in Davos said pessimism had eased as the US and Europe economies remained resilient and China loosened its COVID-19 policies.
Describing 2022 as a “strange, strangest year when you look at it”, European Central Bank (ECB) President Christine Lagarde called on governments to ensure that fiscal policy warmed the economy and kept central bankers on their toes. Didn’t make the job difficult.
“‘Stay the course’ is my mantra on monetary policy,” he said, confirming that the ECB planned to continue tightening as long as needed.