More than 2,500 notable leaders of the business, political and philanthropic worlds gathered in the small mountain village of Davos, Switzerland, for the annual meeting of the World Economic Forum between January 27 - February 1, 2009. The World Economic Forum being an impartial, independent, international organization incorporated as a Swiss not-for-profit foundation in 1971. The organization works towards improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas.
More than 2,500 notable leaders of the business, political and philanthropic worlds gathered in the small mountain village of Davos, Switzerland, for the annual meeting of the World Economic Forum between January 27 - February 1, 2009. The World Economic Forum being an impartial, independent, international organization incorporated as a Swiss not-for-profit foundation in 1971. The organization works towards improving the state of the world by engaging leaders in partnerships to shape global, regional and industry agendas.
With much of the financial system in Australia, Austria, Britain, France, Russia, Singapore, the United States and most countries in crisis, the 2009 agenda at Davos: "Shaping the Post-Crisis World," hijacked world's top minds. Past hot themes like Middle East, wars, deforestation, climate change and globalization took lesser position.
At that 2009 edition, two key issues dominated discussions: the unrelenting economic gloom and the fragility of the banking system. Two questions were at the fore: Just how bad will this global recession get? And what will provide the growth needed to end it?
For economists, the issue is not whether there is a recession, but what type of recession it is going to be? Short recessions like the Reagan recession of 1981 and 1982, the one from 1990 to 1991, the one from March to November 2001, or something like the Great Depression of 1929-1939?
Stephen Roach, chairman of Morgan Stanley Asia had predicted that an economy built on debt and asset-price bubbles would one day collapse. The present crisis, according to Roach, will be the worst recession year since 1982, with global growth of just 1%.
A number of commentators have suggested that if the liquidity crisis continues, there could be an extended recession or worse still, fears of a global economic collapse. However, things are not going to be gloomy all-year as the global economy will grow better before the end of 2009.
German-born professor Klaus Schwab, Founder and Executive Chairman of the Forum called for unity among companies and governments trying to steer a path clear of the global financial crisis. He wanted even those banks that helped create the economic problems many nations are now facing to be included in efforts to find a solution.
Critics have held in unison that many of the problems discussed at Davos were actually caused by the powerful elite that flocks to Davos every year.
President Obama ordered several key US officials to stay at home and tackle economic and political flashpoints. Many economic analysts have blamed the less-regulated US-style capitalism for the economic crisis, which started over bonds based on shaky American mortgages.
The bankruptcy of Lehman Brothers on Sunday, September 14, 2008, formally ushered the financial crisis into an acute phase marked by failures of prominent American and European banks. Efforts by the American government to rescue distressed financial institutions led to the passage of the Emergency Economic Stabilization Act of 2008. In also weathering the storm, the Democratic-controlled Congress and White House agreed February 11, 2009 and passed a $790 billion economic stimulus bill designed to create millions of jobs in a nation reeling from recession.
While most Obama administration officials have skipped the yearly gathering of movers and shakers in Switzerland, participants at Davos spent time divining Obama's intentions on the economy and other issues.
In attendance, Obama's advisor Valerie Jarrett offered no fresh details on Obama's economic plans but emphasized that the administration would pursue a new financial regulatory framework based on increased transparency and pledged the stimulus would be an "aggressive and extraordinary action" aimed at boosting the economy. In Davos 2009, there was palpable anger at the United States over the global financial crisis.
Russia faces complex economic, social and environmental challenges and stakeholders at Davos were made aware of Russia’s possible futures.
Post-Davos Germany is looking for ways to make its bank-bailout policies more effective after banks showed interest in the €500 billion rescue fund the government set up in October 2008.
Europe European Central Bank is drawing up guidelines for "bad banks" to house toxic assets, as Germany moved closer to legislation to help its banks set up individual bad banks. The parties in German Chancellor Angela Merkel's coalition have expressed support in recent days for a plan under which Germany's banks would move bad assets off their books. With a considerable energy endowment, coupled with its still important military power, international connections and influences, Germany has taken on increased strategic importance from both an economic and a geopolitical perspective.
Time reports new European Commission forecasts for the Continent's leading economies are nothing to cheer: the Commission expects Germany to contract by 2.3%, Italy and Spain by 2% and France by 1.8%.
Japan's economy, too, is expected to shrink this year. Reduced demand in the rich world for goods from newly industrializing nations means that the shocks have spread even to those economies whose turbocharged growth led some to claim, as late as 2008, that the booming nations of the developing world had become decoupled from the slow-growing, mature economies on either side of the Atlantic. Some decoupling; as export markets shrink while Western consumers rebuild their battered household balance sheets, growth in China, according to Goldman Sachs, is expected to slow from 8.9% in 2008 to 6% in 2009.
Participants at Davos cited numerous signs of a policy response that is in danger of going badly off course, including efforts in the developed countries to direct fiscal stimulus funds to national producers through domestic content requirements and other protectionist measures.The withdrawal of state-supported lenders from emerging financial markets and a reluctance to recapitalize the IMF and other multilateral lending institutions on the scale required by the crisis.
China’s future is not merely of interest for experts. China’s impact on global growth, resource allocation, trade and investment, as well as geopolitical balance has direct consequences for every part of the planet.
To gain a better understanding of the possible outcomes, along with the key trends and events that might shape them over the next 20 years, the World Economic Forum set out to develop scenarios on the future of China. The resulting scenarios are the creation of all who took part in the project—they go beyond the assumptions and perspectives held by any individual, interest group or organization.
China’s future is not merely of interest for experts. China’s impact on global growth, resource allocation, trade and investment, as well as geopolitical balance has direct consequences for every part of the planet.
The 2009 Forum provided an opportunity for India to showcase “India and the World: Scenarios to 2025” project. The project explores the potential directions in which India may go over next 20 years. The three scenarios presented by the World Economic Forum and Confederation of Indian Industry, draw on the views of over 100 experts from within and outside India and examine issues including global integration, geopolitical stability, employment, demographics, infrastructure, leadership, administrative reform, political reform and rural development.
The Kingdom of Bahrain, the United Arab Emirates and the Kingdom of Saudi Arabia were identified at the Forum as key national drivers in the Gulf Cooperation Council zone. These countries were challenged to successfully implement the necessary and relevant economic and political reforms and enforce the rule of law, both in public and in private governance.
The Davos Forum coined 'Fertile Gulf' to describe the rise of the Gulf Cooperation Council countries as innovation hubs in a global environment characterized by robust demand for energy and increasing globalization.
In the wake of Davos, Afica elected Muammar Gaddafi as AU Chairman. Many analysts have described Africa as lacking unified action and effective leadership creating a continuous and cumulative source of problems for the continent. Will AU under Gaddafi be able to maintain internal order and economic stability, in particular vis-à-vis a complex and uncertain continental situation?
Libyan leader's idea that Libya may nationalize its oil sector has raised some eyebrows among international oil firms. This may be unprofitable to Libya as the country is emerging from a sanctions-induced economic vortex and looking to woo international investments.
When the global financial meltdown erupted last year, Africa hoped to survive unscathed. In a globalised economic system, as happenings have revealed, Africa is not insulated. Jobs losses are recorded across the continent: Skorpion Zinc mine in Namibia, horticultural industry in Kenya, with Nigeria slashing salaries of political office holders in the face of stifling global economic meltdown. As global trade slumped, demand for South African agricultural and mineral exports have fallen drastically. If this trend continues, millions, mostly in developing economies, will be pushed into extreme poverty.
In the 38 years that business and political leaders have been meeting in Davos to talk about the world economy, the outlook hasn't been bleaker or global capitalism more racked with self-doubt than the 2009 gathering.
The organisers of the not-for-profit Forum were not short of presidential participants at the 2009 event, as forty heads of state - compared with 27 last year attended.
Richard Severin Fuld, Jr. of Lehman Brothers who many see as a leading culprit of the credit crunch was one Davos regular who was apparently absent this year. The Financial Times, a British international business newspaper had in December 2008, given Fuld the "Lex Overpaid CEO" and "thief" award. While CNN named him as one of the "Ten Most Wanted: Culprits" of the 2008 financial collapse in the United States. Lloyd Blankfein, the chief executive of Goldman Sachs, sent his deputy.
At the 2009 gathering, politicians and corporate titans echoed the broader power shift away from the free market as one government after another tries to prop up its sinking economy. The gathering focused on the most important regional and global trends to understand how they affect an evermore interconnected world.
The World Economic Forum has helped world stakeholders to better understand the dynamics and critical issues shaping the future at both the regional and the industry level, to communicate shared understanding and initiate dialogue and action internationally.
The message from the 2009 Annual Meeting is that business, political and philanthropic world leaders must continue to develop a swift and coordinated policy response to the most serious global recession since Davos began. Global challenges demand global solutions. Business ultimately has to serve not just shareholders but society at large.
In terms of remedies for the current economic crisis, corporate titans and other participants at Davos 2009 urged governments and firms to do whatever is in their power to preserve employment and avoid mass layoffs, which would further ravage consumer and business confidence. Voluntary salary reduction and job sharing schemes could help achieve this while still giving firms latitude to cope with sharply declining revenues. Investors and analysts should also be publicly pressured not to penalize company shares for maintaining employment levels.
Participants also discussed various proposals for encouraging investment in alternative energy and other green technologies. A great opportunity exists to generate a new wave of economic growth based on technologies, products and services directly meeting societal needs in eco-efficiency, healthcare, transportation and the empowerment of people.
We need to restore confidence in our future. It was Maria Ramos, the Group Chief Executive, Transnet, South Africa and Co-Chair of this year’s Annual Meeting who said: This is the time to see courageous leadership on the part of the G20. The time for words is over; this is the time for implementation and action. If we come back in six months or a year and are still talking about the same things, we will have failed. And the social unrest we will have to deal with will be absolutely dramatic.
Nwosu Chukwuemeka
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http://www.haaba.com/news/2009/02/13/272-249308/shaping-a-postcrisis-world
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