What to expect from the World Economic Forum in Davos

De-globalisation, the Russian-Ukrainian war, inflation and climate change will be front and center this week as business and political elites flock to the small Swiss Alpine town of Davos.

They have been drawn here for more than 50 years, lured by the prominent conference on world affairs and capitalism, as well as the snow-capped peaks and ski slopes. This year brings a change of weather.

The World Economic Forum (WEF) kicks off in person on Sunday for the first time since the start of the Covid-19 pandemic in early 2020, after being postponed from January. The spring weather – and lack of skiing – won’t be the only reinvention at Davos in 2022.

The WEF has been beating the drum of globalization and consensus around progress for decades. These frameworks are now redesigned. From the Russian-Ukrainian war to the lingering challenges of tackling climate change, the “stakeholder capitalism” popularized by WEF founder Klaus Schwab is on shaky ground.

“This will be the most timely and consequential annual meeting since the forum’s inception,” Schwab said at a press conference on Wednesday. “The political, economic and social circumstances of our meeting are certainly unprecedented.”

The five-day forum has played a vital role in world politics since its inception in 1971. Negotiations at the WEF helped Greece and Turkey avoid war in Cyprus in the 1980s. Nelson Mandela and FW de Klerk shook hands in Davos as apartheid drew to a close in South Africa. In 2000, the conference launched the Global Alliance for Vaccines and Immunizations, which has helped ship more than a billion Covid-19 vaccines around the world.

Among the headliners this year will be German Chancellor Olaf Scholz, European Central Bank President Christine Lagarde, International Monetary Fund Director Kristalina Georgieva and European Commission President Ursula von der Leyen. The WEF is inextricably European.

President Joe Biden will not be present, but dozens of other heads of state will. In addition to Western leaders of companies such as

Ali Baba
,

Ant Group and Tencent, there seems to be a weak Chinese presence. Many will be disappointed to not see

JPMorgan Chase

CEO Jamie Dimon.

For obvious reasons, Russian President Vladimir Putin and the titans of Russian business have been shunned. There is war at the gates of Davos. The title of this year’s lecture is “History at a Turning Point” and Schwab says the invasion of Ukraine marks “the collapse of the post-World War II and post-World War II order.” -cold War”. Ukrainian President Volodymyr Zelensky will attend via video link.

The war in Eastern Europe has shaken two decades of regional consensus on relations with Russia in the space of three months. This caused a generational reversal of German defense policy and a consideration of the role of Russian money in the UK. Yet the war in Ukraine could also dilute the role of the business-focused WEF.

“For a long time, Davos occupied a space that state-run multilateral institutions used to fill,” says Gerald Butts, vice president of policy consultancy Eurasia Group and former principal secretary to Canadian Prime Minister Justin Trudeau. .

“When you have active, kinetic conflict in Europe, everyone suddenly remembers how important states are,” says Butts. “Is Davos as relevant as it was 10 years ago? I don’t think you can objectively say yes.

The inequalities and supply chain chaos of the Covid-19 pandemic had already strained an interdependent world. Today, the invasion of Ukraine has spurred the dislocation of Russia and its economy from the West, accelerating the reversal of globalization that began in earnest with former President Donald Trump’s trade war against China. China.

“I would characterize this as the end of the beginning of de-globalization,” Butts says. “I think [elites are] mostly groping in the dark right now and I think they don’t know what the end state looks like.

Davos still offers hope for progress, though it faces the pitfalls of other conferences, such as the UN Climate Change Conference and the G-7, which can often make grand statements that sound like promises. empty.

It always helps to get a group of the most powerful people in the world together.

Progress

is progressive, and each public panel is bolstered by behind-the-scenes and after-hours discussions.

“Pushing people in the right direction when it comes to issues around bias, sustainability, labor, mobility – you’ll get there eventually, even if there isn’t a huge signing ceremony and trumpet sounds,” said Paul Donovan, chief economist at UBS Global Wealth Management.

The WEF remains a business-oriented forum, and now is not the ideal time for business. Many Davos CEOs are likely to lead companies that have suffered severe stock price declines. The S&P 500 index has fallen nearly 20% this year and investors are flirting with a bear market.

The outlook for global growth remains fragile, with inflation at its highest level in decades, compressing the world’s poorest even more than corporate profit margins. Now, central banks such as the Federal Reserve act aggressively to tighten monetary policy at the risk of depressing economic demand to the point of triggering a recession.

Donovan remains hopeful that central banks “can act quite aggressively on policy early on, and then slow the pace of policy tightening as they move forward.”

“Even with the oil price shock, we are going to see a process of moderating inflation over this year,” the economist said. “Central banks are going to bring politics back to a more normal setting, because this is a normalizing world.”

For now, the world seems far from normal. The absence of skiing in Davos only underlines this.

Write to Jack Denton at [email protected]

Melvin B. Baillie