World Economic Forum panelists in Davos address uncertain U.S. economic outlook
The outlook for the U.S. economy is unusually cloudy as war rages in Ukraine, commodity prices surge and the Federal Reserve embarks on a tricky campaign to tame inflation with higher interest rates.
Panelists said during a World Economic Forum panel Monday in Davos that the uncertainty is rattling financial markets and complicating investment decisions for businesses.
Adena Friedman, president of the NASDAQ stock exchange company, said “a selling decision is much easier than a buying decision” for investors who can’t see where things are headed.
Friedman said the U.S. Federal Reserve faces a difficult job raising rates enough to tame the highest inflation in four decades without tipping the economy into a recession.
Harvard University’s Jason Furman, top economic adviser in the Obama White House, sounded cautiously optimistic that the United States could escape recession over the next year. That is partly because the job market has been strong and households still have plenty of savings — even though Americans complain bitterly about surging inflation.
He said most people have jobs but “what matters to them is that they’re getting a once-in-ageneration pay cut” because wage hikes are falling behind rising prices.
The managing director of the International Monetary Fund said a global recession isn’t in the cards but “it doesn’t mean it’s out of the question.”
Speaking Monday at the World Economic Forum’s annual gathering, Kristalina Georgieva reminded the audience that the IMF is forecasting 3.6% growth for 2022, which is “a long way to global recession.”
A moderator opened a discussion about the global economy by asking the audience if they thought there was a chance of a recession. Most of the crowd of about 100 put their hands up.
Georgieva said the global outlook was “a little bit like the weather here in Davos — the horizon has darkened.”
She said it’s going to be a “tough year” and that one of the big problems is surging food prices, partly fueled by the RussiaUkraine war.
Georgieva listed a host of other challenges, including rising interest rates, inflation, the strengthening dollar, a slowdown in China, the climate crisis and a recent “rough spot” for cryptocurrencies.
Other speakers on the panel debated whether Europe would fall into recession after the European Central Bank signaled that it would start tightening monetary policy.
The director of the Center for Oceans Solutions at Stanford University has called for the integration of ‘blue foods’ — a shorthand for fisheries and other aquatic products — into the global food system.
“Blue foods are an important part of the food system but generally ignored in global discussions and the future of food,” Jim Leape said. “The core challenge is to bring blue foods on to the main table as vital part of economic planning and recognize that most blue foods are produced by artisanal fishers and be sensitive and considerate of their daily challenges.”
Speaking at a panel on blue foods and responding to a question on producing aquatic foods sustainably, Leape called for a change on the perception of blue foods as they offer nutritious alternatives.
Ecuadorian environment minister Gustavo Manrique Miranda outlined measures his country was taking to promote blue foods, marine biodiversity, climate smart aquaculture and responsible tourism around the expanded Galapagos Marine Park.
The ruler of Qatar has called out double standards in the West while evoking the killing of a Palestinian-American journalist during an Israeli raid this month.
Sheikh Tamim bin Hamad Al Thani said during a speech at the World Economic Forum on Monday that “we should not accept a world where governments have double standards about the value of people based on their region, race or religion.”
He added: “We consider the value of each European life to be just as precious as someone from our region.”
Al Jazeera, which is headquartered in Qatar and was started by Sheikh Tamim’s father in the 1990s, said Israeli gunfire killed its longtime correspondent Shireen Abu Akleh on May 11.
Israel said she may have been shot by its forces but maintains it cannot be certain without further forensic evidence.
Sheikh Tamim called on the world’s political and business elites gathered in Davos to give as much attention as they are to Ukraine to resolving all forgotten or ignored conflicts.
He said “the most glaring example is in Palestine” and prays “the world wakes up to the injustice and violence and finally acts.”
Governments need to “make it worth the while for private industry” to invest large sums into carbon dioxide removal technologies, a top US Government advisor on clean energy and climate change policy said.
“(Governments) can do this through tax incentives … you can do this through public procurement. There’s a range of ways to make it worth private industries’ while,” said Varun Sivaram, the senior director for clean energy and innovation for the U.S. department of state.
The most recent report by the United Nation’s Intergovernmental Panel on Climate Change estimates that the deployment of carbon capture removal technologies is far behind what’s needed to meet internationally set warming targets.
“We need a scale up of a factor of 1 million to get to where we need to go. And that means that by 2050, this (carbon dioxide removal technology) needs to be the size of the oil and gas industry,” said Christian Mumenthaler, the group chief executive officer of insurance group Swiss Re.
Nili Gilbert, the vice chairwoman of carbon removal investment company Carbon Direct, said “the enormous scale of the opportunity … captures the imagination of finance” and encouraged significant participation from the financial industry.
The head of chipmaker Intel said a shortage of advanced equipment to make semiconductors could hold up global expansion plans.
Intel CEO Pat Gelsinger said Monday that there have been “quite significant extensions” in delivery times for chipmaking gear for new chip factories, known as “fabs,” that the company plans to build in the U.S. and Europe.
Gelsinger said at a media roundtable on the sidelines of the World Economic Forum that “to us, this is now the No. 1 issue, is in fact the delivery of equipment.”
A handful of suppliers make high-tech semiconductor manufacturing gear, such as Dutch company ASML. A shortage of semiconductors that erupted last year hurt the availability of everything from autos to kitchen appliances and highlighted the industry’s vulnerability to manufacturing centered in Asia.
Intel announced tens of billions of investment in new chipmaking facilities for Europe, including a new fab mega site in Germany and expansion in Ireland. In January, it announced a plan for a $20 billion plant in Ohio.
Gelsinger said supply of chipmaking equipment is “the most important pinch point to the build-out of capacity today.”
He added that he’s urging authorities in the U.S. and Europe, which have each launched their own “Chips Act” to promote national semiconductor manufacturing, to speed up the legislation.