Davos 2023: Outlook brighter than feared, fraught with risks

By Mark John and Brenda Goh

DAVOSSwitzerland – The year ahead looks better than feared for the global economy but risks remain fraught with risks including an escalation of the conflict in Ukraine and the emergence of a transatlantic trade war, the final panel of the World Economic Forum to end.

International Monetary Fund (CAI) Managing Director Kristalina Georgieva told the Davos audience that what improved was that China could boost growth and CAI China’s growth of 4.4% is now predicted for 2023.

Although that would probably encourage the CAI in the coming days to upgrade her current forecast of 2.7% growth for the coming year, she warned against expecting any “significant improvement” on that figure.

One risk of China’s reopening, which could heat up global demand and energy prices, is that it triggered a new wave of inflationary pressures just months after the peak.

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This week’s meeting was dominated by a debate on a brewing dispute between the United States and Europe over subsidies for a green energy transition, the growing debt distress of developing nations and geopolitical risk abounding across the planet. .

“Obviously the war in Ukraine is my biggest concern,” French Finance Minister Bruno Le Maire told the panel, warning of a possible escalation while claiming he pushed the EU European to become a greater political force while trying to remain supportive. Ukraine.

Le Maire, who is involved in efforts to resolve the dispute with Washington over a $369 billion state-subsidized climate transition that Europe says is anti-competitive, said the plan must be compatible with similar efforts across the deep

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“The main issue is not China first, USA first, Europe first. The main issue for all of us is climate first,” said Le Maire, who will travel to Washington in the coming days with German officials to discuss possible changes to the US plan.

Former US Treasury Secretary Larry Summers said the Biden administration’s subsidy package represented Europe’s planned effort to tackle climate change, at least an increase in action on the long-overdue green energy transition.

“A subsidy war is a good thing about a very good thing,” he told the panel. “That’s a very healthy competition compared to all the competition that’s been seen around the world,” he said, urging fair competition that “didn’t block others and try to bring others down “.

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Wall Street executives in Davos said pessimism eased as economies in the US and Europe remained resilient and China dropped its COVID-19 policies.

Describing 2022 as “a strange year, strange when you look at it”, the European Central Bank (ECB) President Christine Lagarde asked governments to ensure that fiscal policy would not make central bankers’ jobs more difficult by heating up the economy.

“‘Stay the course’ is my mantra on monetary policy,” she said, reiterating that the ECB planned to continue tightening as long as necessary.

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