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January 30, 2011

World Economic Forum Annual Meeting at Davos, Switzerland: Business Leaders Point to Key Risks Facing Global Economy

Asset bubbles in emerging markets, soaring commodity prices, state debt are key risks.

World’s financial system is in better shape than three years ago.

No consensus on how to tackle high state debt.

Davos World Economic Forum

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Photo: Aerial Photo of Davos, the biggest tourism metropolis of the Swiss alps, captured before the opening of the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 17, 2011. Davos is in the middle of Swiss Alps and the city for holidays, sports, congresses, health, development and culture. © World Economic Forum/Andy Mettler.

World Economic Forum

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Photo: Oriana Bandiera, Professor of Economics, London School of Economics and Political Science, United Kingdom, is captured during the ‘IdeasLab with the London School of Economics: Doing Better with Less’ at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 26, 2011. © World Economic Forum/Jolanda Flubacher.

World Economic Forum

Photo: Daniel Goleman, Co-Director, Consortium for Research on Emotional Intelligence in Organizations, Rutgers University, USA, speaks during the session ‘The New Reality of Consumer Power’ at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 27, 2011. © World Economic Forum/Michael Wuertenberg.

World Economic Forum

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Photo: Om Prakash Bhatt, Chairman, State Bank of India, India, speaks during the session ‘Redeploying Development Finance’ at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 28, 2011. © World Economic Forum/Moritz Hager.

World Economic Forum

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Photo: Timothy F. Geithner, US Secretary of the Treasury is captured during the session ‘Priorities for the US Economy’ at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 28, 2011. © World Economic Forum/Moritz Hager.

World Economic Forum

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Photo: William H. Gates III, Co-Chair, Bill & Melinda Gates Foundation, USA, speaks during the session ‘Polio: Eradicating an Old Reality Once and for All’ at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 28, 2011. © World Economic Forum/Moritz Hager.

World Economic Forum

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Photo: Chanda Kochhar, Managing Director and Chief Executive Officer, ICICI Bank, India; Co-Chair of the World Economic Forum Annual Meeting 2011, is captured during the session ‘The Global Agenda in 2011’ at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 30, 2011. © World Economic Forum/Sebastian Derungs.

World Economic Forum

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Photo: Francis Gurry, Director-General, World Intellectual Property Organization (WIPO), Geneva; Global Agenda Council on the Intellectual Property System, is captured during the session ‘The Davos Debrief: Policy Priorities’ at the Annual Meeting 2011 of the World Economic Forum in Davos, Switzerland, January 30, 2011. © World Economic Forum/Sebastian Derungs.

Top business leaders see a host of potential dangers facing the world economy - ranging from asset bubbles in emerging market countries to soaring world commodity prices and huge levels of state debt in Europe. However, it is difficult to say just where the next global shock will come from.

On the question of continuing low borrowing costs and cheap money in the most-developed economies, one of the factors that contributed to the global economic crash, participants said that they are confident that the lessons have been learnt and that the global banking system has emerged stronger from the test.

“I am a little optimistic. I think that we have a stronger system than three years ago,” James Dimon, Chairman and Chief Executive Officer of JP Morgan & Chase, said during a debate on whether the world is now better prepared to face a future systemic shock.

But, business leaders were divided on how to approach the issue of huge state debt built up by some European countries during the boom years.. Some saw the need for Europe’s stronger economies, particularly Germany, to take part of the load by supporting, for example, the launch of European Union-backed Eurobonds in support of weaker economies, such as Ireland and Greece.

But Dimon warned that any “socializing” of states’ debts, by involving other European Union countries in financing them, could send out the wrong message on the need for fiscal discipline. “You have got to make sure that some are not piggy-backing on others,” he said.

|GlobalGiants.Com|

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“Thought, not money, is the real business capital, and if you know absolutely that what you are doing is right, then you are bound to accomplish it in due season.”

— Harvey S. Firestone.

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“It is not by augmenting the capital of the country, but by rendering a greater part of that capital active and productive than would otherwise be so, that the most judicious operations of banking can increase the industry of the country.”

— Adam Smith.


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Edited & Posted by Surender Hastir | 7:48 AM | Link to this Post


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