Prominent guests including ECB President Christine Lagarde, Carlyle Co-Founder David Rubenstein, and Director General of the WTO Ngozi Okonjo-Iweala discuss the threats and challenges faced by the global economy, the trade conditions in 2023 and forecast for 2024, the EU's concerns about subsidies and capital markets union, transitioning to a US-China partnership, building resilience and mobilizing resources, challenges of fiscal reform and financing the green transition, and the difficulties of raising taxes and phasing out subsidies.
Normalization trends in 2023 indicate a positive shift in consumption, savings, economic growth, and trade, but long-term stability is not guaranteed.
Repositioning the US-China relationship from adversaries to partners can facilitate cooperation on climate change, global order, and the broken global trading system.
Deep dives
Global Economy Resilience and Challenges: Slow-Moving Changes Threaten Resilience
The largest challenges to resilience are slow-moving changes such as the shift in the global ecological balance, aging societies, and polarization. These threats, along with ongoing wars and conflicts, pose significant risks to human security. However, there are signs of normalization observed in 2023. Consumption and savings are gradually changing, affecting economic growth and trade. Inflation is also coming down globally. While these trends indicate a move towards normalization, it is important to acknowledge that it does not imply long-term stability or a return to normality.
Reshaping US-China Relations from Adversaries to Partners
The US-China relationship needs to be repositioned from adversaries to partners to address common challenges such as climate change, the global order, and the broken global trading system. Flipping the perspective enables cooperation and fair competition while preserving the principles of openness and fairness. By working together, the US and China can find solutions and bring about positive change.
Opportunities in Trade: resilience in disrupted supply chains and growth prospects
Despite the disruptions faced by global supply chains and trade, there are opportunities for resilience and growth. Digital trade and services trade are growing rapidly, especially in digitally delivered services. Green trade has tripled in value, with $1.9 trillion invested in green technologies. The reshaping of supply chains presents opportunities for bringing economic growth and employment to developing countries, particularly in critical raw materials and green energy sectors.
The Need for Fiscal Reform and Preparation for the Future
Fiscal reform is a critical area often neglected in public discussions. Climate change solutions require globally coordinated carbon taxes to fund the transition and mitigate climate risks. Redirecting subsidies from fossil fuels to green technologies is crucial. Additionally, social security systems and healthcare financing need reshaping to address the challenges of aging societies. These reforms, though politically sensitive, are necessary for a sustainable future.
As The World Economic Forum wraps up in Davos, Switzerland, Bloomberg's Francine Lacqua hosted a blockbuster panel looking at the Global Economic Outlook.