Cautious optimism at World Economic Forum 2024
THE 54TH Annual World Economic Forum (WEF) was held in Davos, Switzerland, January 15-19 under the theme ‘rebuilding trust’. I mentioned this in my article of January 3 on ‘the 2024 trade and economic agenda’. I noted that this forum would address the economic outlook for 2024 which they did in a report and a panel on the Global Economic Outlook. Other panels, which I watched, were on the BRICS and climate change.
GLOBAL ECONOMIC OUTLOOK
The WEF 2024 Global Economic Outlook report does not present an encouraging outlook for this year. Though the economists saw positive developments, such as easing inflation and advances in artificial intelligence (AI), there was a general projection that the global economy would weaken. Uncertainty continued to cloud assessments.
The WEF’s distinguished panel on the economic outlook included the President of Singapore, Tharman Shanmugaratnam; President of the European Central Bank, Christine LaGarde; Minister of Finance of Saudi Arabia, Mohammed Al-Jadaan; and WTO Director General, Ngozi Okonjo-Iweala. Other panellists were from Germany and the USA. In their assessments, the panellists were seeing some return to a level of normality, while pointing out that projections are not reality. The future cannot really be predicted, it springs surprises. Nevertheless, there was clearly concern about what could happen. Structural changes were definitely needed at national and global levels.
In Europe, they needed to focus on advancing the establishment of their single market. The WTO DG stated that there were positive signs that trade was recovering, but it would still be below GDP growth. There is a need to focus on what is required to accelerate growth. Bright spots in trade were pointed out as digital and services trade and green trade. These have been increasing and it should be determined how micro, small and medium enterprises could benefit more.
Panellists were concerned about geopolitical developments: the wars in progress and their implications; the many elections due this year and their possible outcomes, including the elections in the USA which could see Donald Trump returning to the presidency. There is also unease about the dysfunction in US governmental organs at this critical time. People outside the US are watching and strategising.
Issues raised included climate change, economic reform, development financing, financing the green transition, redirecting subsidies, and preparing for an ageing population. The world needs to take hard decisions, many of which will be politically difficult. A message emerging, for me, was that governments were restrained by thinking and planning in election cycles with eyes on re-election. Note that there could be 40 elections this year.
There are opportunities to grasp in green technology, but financing and investments are needed. Private sectors need to be engaged and prepared to take risks.
So, the analysts are not viewing 2024 with great optimism, but with caution and apprehension.
BRICS
The panel on the BRICS Forum had representatives from India, China, South Africa, and new member, the United Arab Emirates. In the discussions on the new members invited last year, it was noted that Argentina would no longer be joining. The new conservative Argentine President, Javier Milei, informed that his country would now be with the West.
The WEF panellists were united in pointing out that the expanded BRICS was focused on economic cooperation and was not a political body. The forum was about geoeconomics and not geopolitics. They were aimed at developing a south-south trade and investment agenda to promote trade growth and development. They were about cooperation and consensus, inclusion and growth; no member wanted to dominate, not China or India. In fact, India saw itself as a centre of growth and a bridge between the BRICS (the South) and the western countries. They were also about dialogue on all issues, and saw economic cooperation among themselves as benefiting the world. So, the WEF recognised the significance of the BRICS, as there is concern about global fragmentation.
CLIMATE CHANGE
The climate change panel reviewed the outcomes from COP28 held in the UAE last December. There was agreement that there were some successes related to, among others, phasing out of fossil fuels, increasing renewable energy, and financing. The point was made that there have been successes in increasing the use of renewable energy in countries, such as Germany, India, and China. The transition to green energy is on the way and is not likely to be reversed. An important area which requires further growth is the capacity for storing green energy. An area of disappointment remains financing and investment and especially in emerging and developing countries. The private sector needs to be engaged in climate change adaptation and mitigation and the green transition.
There is anxiety about a possible return of former US President Donald Trump and a setback to climate change. US Climate Envoy, John Kerry, was of the view that the green transition is in progress in the US and would not be reversed regardless of who is US President.
While some progress is being made, a lot still needs to be done and at COP29, the hope is that a timetable for phasing out fossil fuels could be set.
So, in 2024, there will be a lot of work to be done in rebuilding trust in a world facing many uncertainties, providing serious challenges to small developing states, such as those in CARICOM.