2019 SUMMIT IN DAVOS
The Annual World Economic Forum in Davos, Switzerland is a platform bringing together leaders from every sector and every part of the world to discuss how to cooperate on the challenges ahead.
Davos is an acknowledged hub for discussions on shaping of the world economy, trends in cutting-edge technology and global social problems. Each year the forum’s agenda is extremely intensive with diverse topics being discussed. The main theme of this year's meeting was Globalization 4.0 whereby the present era of technological changes is significantly different from the ones that mankind has faced up to this time.
The rate of change has dramatically accelerated in the recent decade: digital technology, economic progress, social outcomes are all changing very quickly. Moreover, the last two have become more dependent on the effect of the digital economy.
The digital economy will create change in jobs by bringing process automation with artificial intelligence into the workplace, so companies should provide continuous learning opportunities for the workers to be empowered by the technology.
Ken Hu, Deputy Chairman of Huawei Technologies Co. Ltd, defined the 5G as the biggest market technology that will bring great benefits in the nearest future. For industries, the 5G will have a significant role in the digital transformation such as smart manufacturing, autonomous driving etc. According to GSMA Association by the year of 2025 the 5G technology will be deployed in 110 countries.
Technology brings great benefits to society, but its challenges come along as well. People experience some discontent in the current techlash in terms of economic inclusion and privacy matters in this era of digitisation via open source software. Advances in authentication technologies, from biometrics to blockchain, could be a game-changer for the global movement of people and goods, as well as increased government transparency.
The issues that have been generated by the functioning of digital currency are rather controversial, and experts’ opinion regarding its real value and volatility in the long-term perspective are opposing due to the novelty of digital technologies. However, the industry is likely to become more structured once it evolves into steadier phase with technological and regulatory innovations being implemented.
Globalization has helped developed countries to grow but many people are reluctant to this process mainly because it is not inclusive and there is a lack of knowledge about it. Simultaneously, digitalizing Emerging markets is one of the most important potential opportunities for achieving Globalization 4.0, and this leapfrog technology could unveil the potential of digital commerce to those countries.
Emerging Markets Outlook
Economy experts believe that Emerging markets will power global economic growth over the next decades. The forecast for overall global consumption by 2025 is to increase twice its level from 2013 and taking population growth into account, approximately half of this increase will come from emerging regions.
To support this opinion with regards to population growth, Kamal Nath, Chief Minister of Madhya Pradesh state in India, pointed out that markets are going to be dictated not mainly by monetary policy and protectionism but also by demographics. Moreover, today’s Indian economy growth is driven by its tremendously aspirational young generation.
Guido Sandleris, the president of Central Bank of Argentina, during the panel discussion explained the progress of numbers in Argentina after the 2018 crisis, which implied a rise of 110% in the price of the dollar and an inflation of 48%, the second highest in the region behind Venezuela.
Carrie Lam, Chief Executive of Hong Kong, noted that Asia now is really growing fast, and the government is willing to strengthen ties with emerging economies such as India, Turkey, Argentina to help them to develop. After last year’s crisis, the IMF and others are predicting a recession this year in Turkey.
Europe after Brexit
The UK’s withdrawal from the European Union is forthcoming. The voting during the referendum that took place in 2016 in Britain indicates a sense of division and how the media channels can manipulate opinion. Simultaneously, the experts agree that if a new referendum takes place in the nearest future it won’t remove the uncertainty that Britain experiences today.
Martin Wolf, Associate Editor and Chief Economics Commentator at The Financial Times, focused on what implications Brexit has for the UK, and for Europe: "The first point is the uncertainty will not be removed on March 29, 2019. It depends on the path we then follow but in many respects the uncertainty is bound to remain for years, if not decades afterwards.’’
Technology is going to drive the world economy and Europe is running behind here. It is not in anyone's interest to have a disorderly exit as Europe could be much stronger on world arena when being united.
Future of Finance and Trade
The multilateral trading system created after the Second World War has never seen challenges this big. The challenges such as increased protectionism and trade wars between countries undermine the global trading system.
Christine Lagarde, Managing Director, International Monetary Fund noted that, the US-China trade war as the biggest risk. “This is the major risk we are seeing that could precipitate a slowdown of the Chinese economy.”
China’s economy grew at its slowest rate since 1990 in the last quarter of 2018 and has a lot of misallocation of resources because of dysfunctionalities in its economic system: Credit is getting stuck in the financial economy. If the real interest rate on bank deposits is earning zero, there is no potential for economic growth.
The World Trade Organization (WTO) being reactive to current transformations in global market place is another major challenge for the multilateral trading system. As Roberto Azevêdo, Director-General of WTO mentioned that it's unacceptable that an organization such as the WTO, in 2018 was not talking about e-commerce or the digital economy, which is the core of the global evolution today. ‘’The system needs to be updated, modernized, or it will lose relevance and disappear’’.
The tendencies in the energy sector indicate increasing global electricity dependency along with classic sources of energy gradually losing their leadership status due to technological and social shifts. Moreover, this process is also affected by resources exhaustion and question on environmental pollution. All these circumstances accelerate development of alternative sources of energy and use of smart technologies for more efficient energy use. It is expected that nearly 50% of global energy to be generated from wind and solar by 2050.
This year in Davos, such subjects were also brought up, some of which, are global climate change that is happening faster than the society thought it would, ageing population of countries like China, Japan and Korea, and possibility of implementing international solidarity tax aimed to fund humanitarian disasters or displaced people.