Fragile economy, other global woes dominated Davos

Jan 29 2013, 08:54 IST
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Davos diary: Much of the glitz and glamour was absent this year. (Reuters) Davos diary: Much of the glitz and glamour was absent this year. (Reuters)
SummaryDavos diary: Much of the glitz and glamour was absent this year

The fragile state of the world economy, along with the relentless turmoil in Syria and the rocky fallout from the Arab Spring, dominated discussions during this year’s annual gathering of the global elite at Davos, leaving many participants uneasy about what lies ahead as they left for home Sunday.

Even broad agreement that there are some positive signs on the economic front, at least in emerging markets, was coupled with a warning from the head of the International Monetary Fund. “Do not relax,’’ Christine Lagarde said. There’s still a “risk of relapse.’’

More than 2,500 of the best and brightest in business, government, academia and civic life gathered for the five-day World Economic Forum at this Alpine resort.

But much of the overt glitz and glamour that is a usual feature was toned down or absent this year, a decision founder Klaus Schwab said reflected the serious issues facing the world.

Political and economic issues vie for top billing each year at Davos, and this time, the economy had the edge, with a special focus on how to promote economic growth and jobs, especially for the youth among the world’s 220 million jobless.

The IMF said that China, Africa, and other emerging markets could see significant growth, but Japan, eurozone nations and the US are likely to struggle with negative to low growth. Ahead of the 43rd forum, the IMF downgraded its forecast for global economic growth this year by one-tenth of a percentage point to 3.5 per cent.

While the US avoided the so-called “fiscal cliff’’ of automatic tax increases and spending cuts, and fears have abated that the euro currency union will break up, there is growing concern that governments may ease up on measures to improve growth and reduce debt that the IMF and many other institutions are calling for.

IMF chief Lagarde said the “very fragile and timid recovery’’ depends on leaders in the 17-nation eurozone, the US and Japan making “the right decisions.’’ The eurozone in particular “is fragile because it is prone to political crisis’’ and slow decision-making, she said.

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