This year, Davos once again experienced, after a forced three-year hiatus due to the coronavirus, the glamor of a meeting of leading politicians, businessmen and scientists from around the world at the meeting of the World Economic Forum.

The outlook for the global economy, as in previous years, was the main topic of discussion in numerous panels, along with the age-old theme of climate change and geopolitical issues, which were given special attention this year due to the Russian invasion of Ukraine.

This year’s meeting took place at a difficult time, as the war in Ukraine, the energy crisis and high inflation have created serious problems for most of the world’s economies.

However, the positive developments of the last 1-2 months, such as a significant decline in energy prices and especially natural gas, the resilience demonstrated by the European economy, the slowdown in price growth and the gradual restart of the Chinese economy after the lifting of restrictive measures due to coronovirus, caused moderate optimism about the future.

Ann Richards, head of the large investment firm Fidelity International, put an end to what was said, saying that those who went to Davos probably left with a slightly more positive outlook on things.

International Monetary Fund Managing Director Kristalina Georgieva described the outlook for the global economy as less bad than feared 1-2 months ago, but stressed that “less bad doesn’t mean good.” She highlighted the improvements driven by lower inflation and the opening up of the Chinese economy, but added that the projected 2.7% global growth rate for 2023 is the third-lowest in decades. “Be careful not to go to the other side of the spectrum, from pessimistic to very optimistic,” he said.

On January 31, the IMF will announce its new forecasts for the global economy, and its Deputy Managing Director, Rita Gopinath, will leave open the possibility of a slight upward revision for 2023, as she says the outlook for recovery from the b-half year.

European Central Bank President Christine Lagarde and European Commission Vice President Valdis Dombrovskis spoke about the prospects for the European economy, and both made it clear that there were no more big concerns.

“The news has been much more positive in recent weeks. It won’t be a brilliant year (in 2023), but it will be much better than we feared,” Lagarde said. However, he made it clear that inflation in the euro area remains very high, despite falling to 9.2% in December, and that the ECB will continue to raise interest rates until 2023.

The heads of the central banks of France and the Netherlands, Villeroy de Gallo and Claes Nott, recalled Lagarde’s statements on December 15 that the interest rate hike would be 50 basis points (half a percent) and more than two.

According to the head of the ECB, restarting the Chinese economy will be a positive factor for China itself and the rest of the world, but will increase inflationary pressure in Europe, as it will lead to higher oil and gas prices due to increased demand.

The Vice President of the Commission stated that the EU. it will probably even avoid a technical recession, that is, two consecutive quarters of negative growth. “We have seen some positive signs since autumn,” he said, “such as a larger-than-expected decline in energy prices as our warehouses filled up at the start of winter,” noting the mild weather that contributed to this development.

German Chancellor Olaf Scholz expressed confidence that his country, which until recently was considered the weak link in the eurozone due to its heavy dependence on Russian natural gas, will not experience a recession. Accordingly, French Finance Minister Bruno Le Maire said that a recession in the French economy is not expected.

Source: RES-IPE