Pre-Davos reports hint at challenges

Two reports have been released as government leaders, business heads and economists gather at the Swiss winter resort, Davos, to discuss the prospects of the global economy under the banner of the World Economic Forum (WEF), which has been holding the event for 30 years and more now, with the intent of spreading the virtues of a free market economy.

When the Soviet Union collapsed in 1991 and the communist regimes in east Europe fell like ninepins, the annual WEF meeting at Davos seemed the opening of a new chapter in world history. But as years rolled by and market economies faced crises of many kinds, the colour and tenor of the Davos meeting changed.

This year, as the WEF meeting sets to open next week, two reports have been issued, one by Oxfam about the state of the poor people, and the other a WEF survey of 60 economists about how the global economy would fare in 2024. Both the reports reveal grim news in different shades of grey.

The Oxfam report says that while the ordinary working people saw no increase in their wages, and that they are unable to cope with the cost of living crisis, the survey of the economists showed that the global economy will grow slowly and not briskly, that South Asia, East Asia and Pacific will witness positive growth, the US and China growth rates would be better, that of Europe will remain bleak.

But the economists were more than optimistic about the impact of Artificial Intelligence (AI), and more than 90 per cent have expressed the view that AI would help increase economic growth, and more than 40 per cent of them said that it would do the same in poorer countries. This is in direct contrast to the view expressed in the Oxfam report that AI would play the role of disruptor and jobs would be lost.

The other highlight of the Oxfam report is that the billionaires added more than $800 billion to their wealth since the end of the Covid pandemic, and that five of the richest among them which included Tesla’s Elon Musk, Amazon’s Jeff Bezos, investor Warren Buffet, LVMH’s Bernard Arnault and Oracle’s Larry Ellison saw a surge in their inflation-adjusted wealth, doubling to $869 billion while the wages of 800 million people failed to keep up with inflation. Oxfam International interim executive director Amitabh Behar said: “This inequality is no accident, the billionaire class is ensuring corporations deliver more wealth to them at the expense of everyone else.” WEF Managing Director Saadia Zahidi remarked, “Reigniting global growth will be essential to addressing key challenges, yet growth alone is not enough.”

With political tensions and wars rocking different parts of the world, global economic growth remains vulnerable. Political stability is the prerequisite for economic growth, and that seems to be unpredictable with the world’s powerful countries unable to end them or prevent them. Davos 2024 will then be held under clouds of war and political uncertainties.

It is anybody’s guess whether the world’s most influential people – political leaders, captains of industry and economists – will be able to come up with the needed answers to the difficult questions facing the world this year. Even if they fail to offer solutions, they would be forced to face the difficult situations facing the world, and at least acknowledge that the atmosphere is not conducive to economic growth.

The meeting then would send out a clear message to the world that there is no alternative to peace. And as WEF’s Zahidi made it clear, “Growth alone is not sufficient.” The poor people and the growing inequality cannot be brushed aside.