The 50th World Economic Forum annual meet drew to a close at Davos, Switzerland, this week. Leaders of various countries, top investment bankers, companies’ management and economists gather at the snow-covered ski resort town to discuss the future of the global economy.
Also, for the first time in its history, the forum welcomed teenage change-makers to its annual meet.
Here are the key takeaways from Davos 2020:
India On India
Some of India’s prominent leaders gave an optimistic outlook for their respective industries. The consumer lending business has “clearly reached the bottom”, and there are early signs of “some uptick”, said Sanjiv Bajaj, managing director of Bajaj Finserv Ltd. State Bank of India’s Chairman Rajnish Kumar expects 8-10 deals in the real estate sector to be done by March by the rescue fund promoted by the government.
Some shared industry insights as the country struggles to shake off a growth slowdown, triggered by a series of events that lowered consumption, investment and credit. Piramal Enterprises Ltd.’s Ajay Piramal said his firm cut down on lending from the quarter ended June of the ongoing financial year. The company also ensured that it only funds the “top” developers in an environment where real estate players are consolidating. Bain Capital’s Steve Pagliuca said an industry-wide funding squeeze crippled India’s non-bank lenders in the last two years, prompting the government and regulator to spring to action. But also that the problem wasn’t unique to India.
There wasn’t as much regulation earlier, there was more freewheeling. They got reined in the U.S. with the new financial regulations and I think they are getting reined in India.Steve Pagliuca, Co-Chairman, Bain Capital
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World On India
The International Monetary Fund’s downward revision of global growth forecast was largely due to the economic slowdown in India, according to Chief Economist Gita Gopinath. “We’ve had a significant downward revision for India, over a 100 basis points for each of these years,” Gopinath told BloombergQuint. “It’s probably the most important factor for the overall global downgrade of 0.1 percent.”
Adair Turner, the chairman of the Institute of New Economic Thinking, said India needs to “wake up to the severity” of the structural challenges posed by its growing working-age population.
The crucial thing for India is to wake up to the severity of the challenge and not tell itself silly stories that it’s getting a major advantage from a demographic dividend, because actually, it is getting a major disadvantage.Adair Turner, Chairman, Institute of New Economic Thinking
Harvard Professor Ken Rogoff, however, is far more optimistic about the Indian economy. He believes the subcontinent has the potential to grow 7-8 percent for a long time, contrary to China which is likely to grow at an average of 3 percent for the next decade. “India has a young population, it has a lot of potential in its infrastructure, to catch up. China is at the other end of the curve. It is reaching the end of the line,” he said.
Speaking about India’s political upheaval amid mass protests against the country’s new immigration law, Ian Bremmer, political scientist and founder of the Eurasia Group, said India’s perception around the globe has taken a hit since Prime Minister Narendra Modi prioritised Hindu nationalist policies over economic reform.
The protests, however, should not be seen as a negative thing, but rather a dynamic force of democracies, according to noted historian and author Adam Tooze.
I don’t measure the success or failure of democracy by the level of protests. I would think of that as an integral part of a deep flourishing democratic culture.Adam Tooze, Professor, Columbia University
U.S. On U.S.
U.S. President Donald Trump, fresh off signing the first phase of a trade deal with China, lauded his trade and economic accomplishments.“Just last week alone the U.S. concluded two extraordinary trade deals,” Trump declared on Tuesday. His deal with China and the renamed Nafta (now the USMCA) “represent a new model of trade for the 21st century, agreements that are fair, reciprocal and that prioritize the needs of workers and families”.
U.S. Treasury Secretary Steven Mnuchin labeled the U.S. as a “bright spot” in the world and attributed that to President Donald Trump’s tax cuts—along with his rollback of regulations and his trade deals.
- Trump Lauds Trade, Economic Wins in Davos Victory Lap
- Mnuchin Touts Tax Cuts With Davos Finale Endorsing Fiscal Boost
On the other hand, billionaire philanthropist George Soros said that Trump’s economic team is overheating the economy.
An overheated economy can’t be kept boiling for too long.George Soros, Billionaire Philanthropist
World On World
Global corporate executives joined the International Monetary Fund in warning the global economy is slowing faster than expected.
PwC Chairman Bob Moritz said global chief executive officers are more pessimistic than ever in 2020, two years after they were seen at their most optimistic. “It’s clear that the amount of risks that the CEOs are dealing with, the magnitude of those risks and the pace of change is tremendous and has never been more expansive,” he told BloombergQuint.
Asia captured $1 of every $2 in new investment in the past decade. Yet, the capital influx has not resulted in higher economic profit, according to Mckinsey & Co.’s Oliver Tonby. A lot of the investments have been into value-destroying sectors, he said.
Speaking about the global oil market, Fatih Birol, executive director at the International Energy Agency, said that Iraq is the single largest threat to an otherwise stable oil market.
Birol warned that if any incident happens in Iraq—the Middle East’s second-largest oil supplier—which affects the stability of the country or disrupts oil supplies, it could have serious implications on markets for the fossil fuel and energy security.
Director of National Economic Research Institute at China Reform Foundation, Fan Gang, expects China’s GDP growth to “moderate” and stabilise around the 6-percent range in 2020. The growth will rebound from there as the economy shifts from an investment-driven model to a consumption-oriented theme as incomes rise. Zhu Ning, associate dean at Tsinghua University, Beijing, expects China to grow 4-5 percent in the current decade as concerns over a ballooning debt pile of the world’s second-largest economy loom large. “I do see China’s economy gradually taking a step down,” Ning told BloombergQuint.
Miscellaneous
Here are other Bloomberg’s and BloombergQuint’s coverage of WEF 2020:
- Google CEO thinks AI will be a more profound change than fire.
- The Donald Trump versus Greta Thunberg “prophets of doom” showdown.
- Time world recognised data dignity, says Microsoft chief Satya Nadella.
- Nielsen’s David Kenny says people are willing to pay more for news than entertainment.
- Verizon warns owning social media can undermine user trust.
- Priyanka Chopra Jonas’ message to the world’s 2,153 billionaires.
- Deepika Padukone says depression, like any other illness, is treatable.
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