Economic gloom looms over annual Davos meet

The annual World Economic Forum is being held in Davos from Jan 22 to 25. US President Donald Trump, French President Emmanuel Macron and British Prime Minister Theresa May are skipping the meeting because of domestic crises. The leaders of China, Ru
The annual World Economic Forum is being held in Davos from Jan 22 to 25. US President Donald Trump, French President Emmanuel Macron and British Prime Minister Theresa May are skipping the meeting because of domestic crises. The leaders of China, Russia and India will also be absent.PHOTO: AGENCE FRANCE-PRESSE

Worries over trade disputes, slowing growth and Brexit to dominate WEF next week

MILAN • An array of crises will keep several world leaders away from the annual World Economic Forum (WEF) in Davos next week, which takes place against a backdrop of deepening gloom over the global economic and political outlook.

Anxieties over trade disputes, fractious international relations, Brexit and a growth slowdown that some fear could tip the world economy into recession are set to dominate the Jan 22 to 25 Alpine meeting.

The WEF's own Global Risks Report set the tone this week with a stark warning of looming economic headwinds, in part because of geopolitical tensions among major powers.

Some 3,000 business, government and civil society figures are due to gather in the snow-blanketed ski resort, but among them are only three leaders of the Group of Seven (G-7) most industrialised countries: Japanese Prime Minister Shinzo Abe, German Chancellor Angela Merkel and Italian Prime Minister Giuseppe Conte.

Mr Donald Trump, who stole the Davos limelight last year with a rare appearance by a sitting US president, pulled out of this year's event as he grapples with a partial US government shutdown.

The White House said on Thursday that Mr Trump had also cancelled his delegation's trip to Davos because of the shutdown.

Treasury Secretary Steven Mnuchin and Secretary of State Mike Pompeo had been expected to lead the US team, according to two senior administration officials.

French President Emmanuel Macron is also skipping the meeting as he seeks to respond to the "yellow vest" protests, while British Prime Minister Theresa May battles to find a consensus on Brexit.

CALMING INVESTORS

Davos will be dominated by a high level of anxiety about stock markets, a slowdown in growth and international politics. The leadership presence is lower than last year, but those who are going... will be seeking to impart a sense of confidence and calm business and investors' nerves.

DR NARIMAN BEHRAVESH, chief economist at IHS Markit, on what to expect at the WEF next week.

Outside the G-7, the leaders of Russia and India are shunning Davos.

China's President Xi Jinping - who was the first Chinese leader to attend the elite gathering in 2017 to offer a vigorous defence of free trade - is sending his deputy instead.

That will leave the likes of British Finance Minister Philip Hammond, Chinese Vice-President Wang Qishan and a host of central bankers with the task of trying to reassure business chiefs.

"Davos will be dominated by a high level of anxiety about stock markets, a slowdown in growth and international politics," said Dr Nariman Behravesh, chief economist at IHS Markit.

"The leadership presence is lower than last year, but those who are going... will be seeking to impart a sense of confidence and calm business and investors' nerves."

Before the US cancellation, a Trump administration official had said the US delegation would also discuss the importance of reforming institutions such as the World Trade Organisation, the International Monetary Fund and the World Bank.

Davos watchers said the absence of so many top leaders this year did not mean the glitzy forum had lost its status as a global stage for top politicians to present their agendas.

 
 

"Abe is going to Davos not just as Japanese prime minister, but also as chair of the Group of 20 (G-20). It will be a perfect opportunity to lay the groundwork for upcoming G-20 meetings," said a Japanese government source.

"Of course there may be inconveniences such as missing opportunities to hold bilateral meetings, but that won't undermine the importance of Davos," he added.

Davos will be the first major international outing for Brazilian President Jair Bolsonaro, elected on a wave of anti-establishment and conservative nationalism also seen elsewhere. He said on Twitter he would present "a different Brazil, free of ideological ties and widespread corruption".

For business chiefs, the value of Davos lies not so much in the public sessions, but in the networking and dealmaking opportunities on the sidelines of the main conference.

A version of this article appeared in the print edition of The Straits Times on January 19, 2019, with the headline 'Economic gloom looms over annual Davos meet'. Print Edition | Subscribe