“Co-operation in a Fragmented World” was the headline for the global economic summit in Davos last week (16-20 January), which marked the first in-person meeting since the COVID-pandemic crisis. The overall takeaway this year from the annual conference was that the global economic outlook remains bleak; the WEF Chief Economists Outlook forecast that the risk of a global recession is high. The IMF expects around a third of the global economy to enter a recession in 2023, and has cut its forecast of global GDP growth for the year to 2.7%.
Panelists at Davos discussed whether the present time can be characterized by “re-globalization or “de-globalization”, with the nations in attendance contributed their projections for the future economy. WTO Director General Ngozi Okonjo-Iweala underlined that trade could make a substantial contribution to global growth, while US Trade Representative Katherine Tai pointed to the need for a global shift to a new trading system that aims to promote inclusiveness, resilience and sustainability. Chinese Vice Premier Liu He reiterated China’s goal of common prosperity but emphasized that this was by “no means a synonym of egalitarianism or welfarism”.
One sign of global tension was the attendance: while the Summit gathered more than 2,700 attendees, world leaders from G7 and G20 countries were mostly absent in stark contrast to previous years, in itself underlining the fragmented world. Participants from Asia included President Marcos of the Philippines, who warned that increasing tensions in the South China Sea were harming trade, and President Yoon Suk-yeol of the Republic of Korea, who vowed to work with other countries to stabilize global supply chains. Much attention was focused on India with growth prospects for the coming years differing positively from most of the world.
At the top of the WEF Global Risk Perception Survey (see below) for the coming 10-year period are the failure to mitigate and adapt to climate change, while for the next two years, the cost of living, geoeconomic confrontation and erosion of social cohesion loom largest in the risk perception.