The Global Economic Outlook | World Economic Forum 2024

 

so hi everyone and welcome really to our panel on the global economic Outlook now the global economy was certainly tested in 2023 as it rarely has been before inflation and the most aggressive monetary tightening campaign in decades Wars in Europe and in the Middle East of festering real estate crisis in China and the deepening rivalry between Washington and Beijing which is really forcing companies also to rethink Supply chains and security now these dis despite these pain points the post-pandemic global recovery has

 actually managed to roll on in the US consumers defied expectations and kept spending prompting many economists to ditch their downside scenarios and forecasts on a rare soft Landing in China the booming electric vehicle industry along with a healthy dose of fiscal stimulus helped leaders stick close to their growth targets and the world's economy great New Hope India also took up some of the slack but overall according to the World Bank the global economy is dragging along at growth rates slower than previous

decades and this is as the post-pandemic rebound is weighing down by a high interest rates so we're looking at sluggish trade geopolitical tensions that will hit developing countries hardest so without giving you a pessimist guide to 2024 we want to look at some of the main pressure points some of the growth foundations for the future and of course there are many elections and expectations on future trajectory for your social media you can also do hash we4 so this is our Allstar panel Christine lagad president of the

European Central Bank Christen lner Federal minister of finance of Germany Muhammad El jadan minister of finance of Saudi Arabia president tharman shamam the president of Singapore Dr GOI okonji Ella director general of the World Trade Organization and David Rubenstein co-founder and co-chairman of car so thank you all for joining us Mr President let me start off with you 2023 really surprised expectations to the upside is the global econom really now as resilient as we think well it's um we have to think

about it not on a year-to-year basis because the largest challenges to resilience that we Face are what's creeping beneath it's the slow moving changes that threaten us in a far more fundamental way in the years to come we know what they are we know what's happening in the shift in the global ecological balance we know what's happening in terms of the Aging of societies which we are by and large not prepared for we know what's happening in the gradual drift towards polarization these are the real threats to resilience

and to human security and I'm not even talking about the Wars including the stupid Wars that we see thank you so much Madel can you talk to us about what you saw in 2023 that gives you hope for economies in the future well good morning to everyone first and uh thank you for having me on the panel because I'm I'm a a strange panelist actually because I cannot talk about the things that I spend 100% of my time on uh I'm I'm a central bank uh president for the European Central Bank we have a monetary policy meeting coming

up on uh Wednesday and Thursday and during one week before that I cannot talk about what I do what I hope for what the analysis uh supporting our conclusions is so I thought long and  hard and I try to identify a few of the trends that we have seen in 23 that will have no impact on our decision next week uh and and what we we should sort of anticipate for the future and I came around to something that I called normalization that's what we are beginning to see uh in especially in the end of 23 but towards something that is

 not going to be normality so from normalization to nonnormality so what do I mean by that the period before 23 was strange extraordinary difficult to analyze by many accounts and 23 we have seen the beginning of normalization when you look at consumption for instance around the world I'm not talking just about uh the Euro area consumption is driving force for growth but the Tailwind that we had the benefit of are gradually fading this very strange extremely tight labor market still tight but a little less and

some of the indices that we use to identify the relationship particularly between vacancies and unemployment are changing gradually so less tightness on the job on the job market when we look at savings around the world there was plenty of it excess saving with that excess saving pretty much in all advanced economies in particular is coming down and from this 10% excess saving we're getting close to virtually zero so if you combine these two job less tight savings diminishing clearly consumption is not as strong a force as

it used to be that's one thing the second thing which is also beginning to normalize and I hope and GOI will talk a lot about that is trade trade went down and was massively disrupted by this Goods versus Services versus good over the course of the last two years preceding 23 but it is beginning now to really pick up and in October we had global trade numbers that for the first time in many months was up and the pattern of train is changing but I will leave it to uh my friend and GOI to to describe that better and the third normalization and I

have to say that is that around the world not including the Euro area around the world inflation is coming down and we have seen it yet again in November both headline inflation and core inflation so that's what I call the the normalization that we have observed in 23 and maybe you'll give me the floor another time to talk about how it is not normality that we're heading to we'll certainly will talk about that Dr go could you talk to us a bit about the resilience that you've seen in Global

Supply chains and trade well thank you I think Christine has set me up nicely let's see if I can if I can move on that um it is true that in 2023 trade was considerably down actually we Goods trade we had to revise our forecast down from 1.7% for the year to 0.8% in the last quarter as you said we saw an optic in the numbers uh and trade showed a recovery LED by Automobiles and components and parts um so um but all in all when we look at the first three quarters and the last quarter we still think we'll come

in at about the number we projected or slightly less than that we had been more optimistic about 2024 and we were forecasting a considerably a considerable recovery to 3.3% so like Christine said maybe moving uh towards normalization or how you put it uh but not normal uh because trade growth is still below trend is still trending below GDP growth um but the problem that I have is the geopolitical conflicts that we now see the the the uh problem in the Red Sea and the SWS Canal we also have problems in the Panama

Canal because of climate change um there are so many uncertainties and of course all the elections that we we see around the world and what that may bring I think there are a lot of uncertainties that make forecasting difficult however I'll take a bit of a risk and say I think it will still it will be better than 2023 it may not come in at 3.

 3% below that but much better than what we saw in 202 uh3 unless a major war breaks out then all bets are off thank you Dr GOI Minister Lindner Germany has prospered parts for many years from buying energy from Russia and selling cars to China all of that is changing also because China is making so many EVS how do you marry the two well given the the um historic uh shocks uh we have seen the the last years the global economy has shown remarkable resilience and the ger economy has shown resilience as well think about uh the energy situation you have mentioned we had to

 re invent the German energy infrastructure and Supply in the last 18 uh months and so we have um um not the growth perspective uh we are um expecting but our economy uh has shown uh this uh resilience looking um um to what will come um over the next years um Christine that said okay we are in the process of normalization um I would say we are witnessing a new normal and 2023 marks this new normal um think about the ways of artificial intelligence we all um have uh discussing here in Davos uh think about the geopolitical tension and

 the threat of fragmentation we will have to deal with over the U next years the higher debt levels after the pandemic and the energy price hikes which um has shrunk our fiscal space uh to finance um transformation and um given the um very little growth perspective of the global economy we have to answer the question how we will be able in the future to finance transition uh by the uh private Capital Market and how to fight poverty around the world so for me it's not normalization it is a new normal uh which we have to be uh prepared for and

has 2023 given me hope you asked I would put it this way it was a call for Action because we have to rearrange some policies and probably we see a new Need for structural reforms probably we are at the beginning of an era of new structural reforms Minister aljan what do you see as as the main risks you know compared to maybe the resilience that we saw last year there are a few things I think I would just put possibly from what I've heard a little bit of context I obviously there are the immediate risks that you know will be obvious which is

geopolitics fragmentation um and obviously the debt situation particularly in low-income countries and we are talking about them and we realize that they actually Bose risks but that will add to inflation and and U monetary tightening but these are the immediate ones we need to attend to them but then I think we need to make sure that we also attend to the the medium term I mean the projections that we have seen from the World Bank or the IMF clearly suggest that this decade would be the lowest growth potential for the world

economy compared to the first Deca decade of this century and the second decade and yesterday aai banga said in one of the panels a very nice statement I will CAU him he said these are projections they are not our destiny and therefore we should actually see what can we do to form our destiny by actually changing the you know the way we do things by adopting policies that will actually fuel growth these are very important and again in relation to low in income countries low income countries are actually coming under a serious crunch

of debt and for them to be able to grow they need to invest and for them to invest they we need to restructure their debt and allow them access to money that they can then fuel their own growth which will help the rest of the world thank you so much David Rubenstein what do you worry about the most in 2024 there are many things to worry about well I'm I worry about everything but um I would say the most important thing I wanted to convey is that predictions made in January about what's going to happen in the remainder of the

year is generally wrong last year at this time here in other forums around the world people were predicting the US would likely have a hard Landing if not a hard Landing a soft Landing but a soft Landing implies very low growth as it turns out while the numbers aren't really in yet uh the us will have grown probably around 2 and a half% for 2023 which is much better than anybody really projected at the time uh the US has its challenges for sure uh but inflation is coming down and as a result of that the

Federal Reserve is likely to reduce interest rates um relatively in the near future in our country we have a presidential election I think everybody probably recognizes that and as a result um the Federal Reserve wants to get its uh I think wants to get its its uh rate cuts out of the way before the presidential election is in full steam because if you have pres if you have rate Cuts in right before presidential election it will be seen as helping the candidate uh who's in the white house because it'll Jin up the economy is the

theory and so the Republican nominee would not be happy with that so I the FED is going to get three rate cuts in or more U this year as I expect it will it will have to get those done relatively in the uh in the first quarter certainly in the first half so you can expect to see rate cuts and that will probably Drive the US economy during presidential election years the US economy is generally does pretty well we tend not to be in recessions in presidential election years because Congress spends a lot of money and the

FED tends to be relatively the easy on monetary policy during presidential election years um the biggest risk for the US economy is um the usual risk that everybody has are we going to be in a war somewhere something like that is there going to be another pandemic but um it's really like we look at in the mirror and the enemy is us because the biggest risk we really have is the dysfunction of the US government our inability to pass appropriation bills that fund the government on time the inability of to deal with the debt limit

issues on time those are the biggest things that worry me whether the it's some point the US government just can't get these issues done because of the of the political problems we have in the country and as a result I I worry more about that than other things in terms of the US economy going forward uh we will have a presidential election year and almost everything every candidate will say will probably not be true about what will happen in the future because they probably won't be able to get done what

they say they're going to get done but it'll be interesting to watch but David a number of a number of leaders have expressed concern of what Donald Trump in the White House house means for fragmentation for foreign policy is there any way that the rest of the world can Trump proof their economies um if somebody has a way to do that I think they should patent it and uh probably sell it to somebody else it's be very difficult to do clearly the biggest political change that occurred in the United States last year also was

unpredictable or unpredicted I should say I don't think anybody outside of the Trump family would have predicted IED that Donald Trump would be indicted four times 91 counts uh on various indictments and that his popularity would soar to the point where he has a reasonably good chance of locking up the Republican nomination by by March which is earlier than almost any contested presidential candidate has been able to lock up the Republican nomination if he is nominated be the first time ever that a Republican party has nominated the

same person three times in a row he clearly has a following that many of the analysts missed and I don't think any of the court cases are likely to dis uh change his uh momentum so I think um people should recognize that he's a serious political force and should not discount the fact that he could well be elected again despite the fact that many people in Europe where we are now are not really his biggest fans and so I I wouldn't uh rule out his possibly getting elected again Joe Biden shouldn't be discounted he he obviously

we have two older candidates um people have suggested to me that I should run for president but I say I'm only 74 and you need to be older to run so um but I I do think to be very serious it will be it will be a relatively close election and and the final comment is in our country in the last two presidential elections 45 States out of the 50 voted exactly the same way in each of those two elections only five states voted differently those five states are Arizona uh Georgia um Minesota Michigan uh Pennsylvania and Wisconsin those five

states are the only ones that vote voted differently in those two elections right now Donald Trump is ahead no five of those all five of those states he lost all five of those States last time Hillary Clinton lost those five states as well Biden won them last time so if everything will get down to those five states and right now uh if the election were held today uh it would be difficult to see how Trump would lose that election today but it's a long way away and the most important thing you can say about presidential elections in our

country is things change all the time and we won't know for sure probably until a coule about a month before the election where it's really going to go so Minister Linder how should Europe prepare and again how difficult is it as a finance minister to look at models this is for Minister Lindner for you know how difficult is it to look at models to forecast given all the crises given the elections and actually you don't really know what you're left within 12 months well I think we are talking too much about Donald Trump uh

in in Europe and uh we should um be prepare ourselves for a possible second term um for Donald Trump by fostering our European in competitiveness doing our homework is the best preparation for possible second term of Donald Trump and this includes our um capabilities uh to uh defend ourselves being an attractive partner on eye level when it comes to the economic situation and it when it comes to a fair burden sharing under the roof of NATO is the best we can do to be um um in good partnership with the United States and then it doesn't matter

uh which Administration if we are attractive if we do not have to ask others because we have uh capabilities ourself it's the best way to cooperate and uh this is completely um for for both possible outcomes of the the election in the United States doing our homework Madame lagal yeah I'd love to follow up on what chrisan is saying I think the the best um defense if that's the way we want to look at it is is attack and to attack properly you need to be strong at home so being strong means having a strong deep Market having

a real single market and we should be expecting some suggestions by enri L former prime minister of Italy who is in in charge of producing this report on how we can deepen and improve the functioning of that single Market which is a huge economic zone in the world world but which is not completely a single market yet as many CEOs I'm sure experience on a daily basis and we should more importantly make sure that the money that is saved in Europe or the money that is associated with pension is actually invested in a capital Market

Union that actually functions efficiently to Rally the investment that we badly need for the transition towards a Greener economy which relies certainly for a period of time on fossile fuel but less so as was indicated in the L in the last cop 28 and moves towards renewable where investment is badly needed may just one little aspect because I I'm grateful that Christine has mentioned the capital markets Union um I'm I'm concerned that um some policy makers in the European Union tend to uh follow the

United States to subsidize almost everything but we have to avoid a subsidy race we cannot afford I'm curious of the next us Administration can continue the way they support their economy um I wonder if it's sustainable to pay so so high subsidies but what we have to do is to improve our framework conditions for our economies and to make further progress in capital markets Union our competitive disadvantage compared to the US is not subsidi it's the function of our private Capital Market Mr President Singapore is of

course a country that does well when the world is working well together less well when China and the US are falling apart so what's your take on this us China stress well I think the US China relationship is the central axis of tension when you look at the largest problems we face in the world and it has to be refashioned into the central axis of partnership they look at each other fundamentally as adversaries and then they look for opportunities to cooperate within that framework it has to be flipped around fundamentally they have

to be partners because the challenges that they both face are the same climate change a lack of global order a breaking up of the global trading system the challenges that both of them face and both of them will suffer for it and the two are absolutely essential to any solution to climate to peace and to an open global trading system and then within that you can argue you can Badger you can ensure Fair competition you can ensure that there's a way of dealing with each other that's consistent with the

principes of openness and fair play but we got to flip things around where you're not fundamentally adversaries to one where you're fundamentally partners and then you argue about specifics that's the fundamental repositioning that's required so it's not just about a pause in the relationship it's really about a repositioning in the relationship Dr GOI what are if we move it forward there are three four pillars that we need to put in place to Foster growth and I don't know whether this

year there will be a lot of distractions that keep us further away from that goal but what would you focus on to bring back longer sustainable growth well thank you and I just want to um say that I strongly support what Christian and Christine said I think the best way to be prepared in the for any eventuality is to focus on those things you need to do anyway uh for me at the WT you I don't fret about who is going to come or what is happening maybe that's an overstatement on but in a way he focusing on what do we need to do to

strengthen and reform the organization so that whatever the circumstance it will be able to deliver what is supposed to deliver for people so if we keep doing that I think that's a a strong answer a bit of offense uh in that regard but with respect to to um what are the pillars as we should look at for restoring growth I think that's a very good conversation because we focus a lot on the pessimistic things that might happen but there are some bright shoots um that I want to talk about on the trade side first I want to mention that

in spite of all the uncertainties that we talk about and I pointed to in the beginning trade has been largely resilient it is because of trade that Europe was able to find other sources of energy uh um from the US and the gulf and elsewhere to make up for uh the uh you know withdrawal of energy from from Russia it's because of trade that 35 countries dependent on the Black Sea region from Africa were able to find alternative sources of grain fertilizer so trade has been a force for resilience and there are some bright spots uh in in

in trade uh that we need to be be conscious of there's digital trade and services trade has is growing fast especially digitally delivered Services trade growing at 8% per anom and that is a very very interesting thing because now we're all talking of digital platforms Ai and this is a positive sign and we should be preparing ourselves to say how do we support such trade how do we make sure that it benefits small medium Enterprises women those at the margin um green trade has tripled from 2000 to now

tripled in in value to $1.9 trillion that's another opportunity and finally I want to say that the reshaping of Supply chains I see that as an opportunity and not a challenge and when you see it as an opportunity it could help us look at other sources of growth if you take just one uh supply chain that we talked about here the critical minerals and critical raw material supply chain we we have the possibility that these critical raw materials are found in many developing countries who did not benefit As Much

from the first phase of integration into the global economy there's now a chance to bring them in through developing these Supply chains in place because they have two advantages not only the raw materials but also green energy so combining those two and I'm glad to say that Chancellor Schulz and Europe has caught onto this you can go to Africa or Latin America and develop these Supply chains bring in new sources of growth create new employment lift people up from poverty in these countries so those

are some good opportunities that are out there some Hope on trade uh on trade whoever is elected presid president is not likely to enter into a lot of trade agreements uh the word trade in the United States or trade agreements is almost a curse word now uh the man somebody is in the audience here Mike Froman who negotiated the TPP agreement under President Obama that couldn't even get a vote in the in this in the United States Congress and I don't think any major Trade Agreement could be approved by our current Congress and I don't

think it's going to change for a while no matter who the president is unfortunately um because trade is often seen by certain constituencies of the United States as as favoring jobs offshore and and not really as very not popular at all even Hillary Clinton when she was running for president was against the TPP even though it had been negotiated by Democratic Administration in which she had served um on us China us China is the most important bilateral relationship in the world there's no doubt about it but there is no political

benefit in the United States about saying anything beneficial or good about China during a presidential election year so president uh Biden and president Trump I I don't think or either one are going to say we need to have closer ties with China and I'm going to be nicer to China than than I was before it's just not going to happen during a presidential election year hopefully after the election's over uh the progress that's been made recently at the Apec meeting can see some something Blossom but I don't think you'll see

anything Blossom before then though hopefully the Chinese will provide some pandas again the United States which we desperately would like to have Minister alen what are some of the policies that you think we need to put in place now for to make sure that there's success in four or five years that we're maybe not thinking about as much as we should first of all I would like just to follow up on on this I was talking to um a US friend yesterday about almost the same subject and um I asked him whether he is optimistic and he said well at

least it is only for years and someone else will come so it would be interesting to see what is going to happen in the next four years but more seriously I think what needs to be done is looking at how can you actually mobilize your own resources how can you do structural reform I can tell you from experience and I'm not here really to promote what Saudi is doing but from experience what we have done in the last seven years actually helped us significantly in our resilience to deal with the multiple shock that we are

facing um including what the current situation geopolitical tension uh so structural reforms are critically important local Revenue mobilization is actually very important um for countries and obviously the support of multilateral development institutions to catalyze private sector investments in in developing nations and particularly low-income country is very critical catalyzing that is I think will be and I'm actually very optimistic with the reform that the World Bank is doing and and actually bringing migga IFC and

their own ibrd and Ida together to make sure that they provide that support and catalyze more private uh investments in low-income countries I think this is promising and I would love to see some results actually this year Mr President you worry about something that we don't we're not really talking about and this is fiscal spending are we sewing now the the seeds to have an even bigger crisis four five six years from now well I think the most important and most neglected area of public policy is fiscal reform Christian spoke about the

already very high debt levels so we're starting in the wrong place and we're going to have to address challenges in the future that are going to have to require ire more fiscal Investments we're neglecting the issues because it's never Pleasant to talk about raising revenues or raising taxes it's never Pleasant to talk about redirecting subsidies or redirecting spending so we're just merrily gliding into the future tinkering at the edges and even the most major International tax reform of recent years through the

G20 was really about something very small to do with corporate taxes and rearranging and reallocating corporate taxes it's a very small issue compared to the challenges we really face the big issues are how do we address the climate transition how do we address the needs of aging socities and Broken Social Security Systems and how do we address a challenge of a AI era and ensuring that populations can cope with it and benefit from it it's all going to require the public sector so if I just take the first there is no realistic solution to

the climate trans transition that does not involve a globally coordinated system of carbon taxes there's no realistic or Fair solution that does not involve a globally coordinated system of carbon taxes and in gozi and the WTO is coordinating this with several other International organizations it's still early days there's a perception that it's unjust it's unfair it lead to inflation in fact quite the contrary if we don't do this the countries that will suffer most ultimately are the developing countries

they're going to be the worst affected by climate change if we don't do this it's ordinary vulnerable communities that will suffer the most what we need is a system of carbon taxes coupled with subsidies for vulnerable households and a stream of funding for the developing world to allow them to engage in investments in mitigation and adaptation that allows them to keep growing and that's a real opportunity it's a fast solution and it's the only realistic solution and we can't keep ducking it

second there's a huge opportunity of redirecting subsidies the IMF has estimated that about $13 trillion is spent each year in fuel subsidies that's about five times more the amount of subsidies that goes into green technologies and green energy we've got to redirect it redirect those fuel subsidies to helping vulnerable households to helping firms to adjust and to spurring Renewables and other green technologies that's a major redirection it's fair it's sustainable and it's realistic it has to be achieved

 the third issue that's maybe the most neglected is preparing for an aging Society with confidence and it means rejigging in significant ways of social security systems and Healthcare financing systems it's not sustainable too many people who don't need support are getting support and too many people who need support the most in Healthcare systems are not getting enough support so there has to be reshaping of that curve of subsidies within Healthcare to benefit those who needed the most there has to be more

spending on preventive or preemptive healthc care spending to help people stay healthy for as long as for as long as they can rather than wait for the very expensive occasions when they have to end up in hospital particularly for acute ha care so fundamental reform to healthc care and fundamental reform to labor markets to allow people to stay engaged at work if they wish for as long as possible those those are very important shifts in social policy so we have to get real the challenges we Face are different from the past we're not

going to address them by Just tinkering Around the Edges with rearranging corporate taxes and the like it requires raising taxes to take on the climate transition it requires redirecting subsidies to be fair and to ensure that as we age no one is vulnerable and we can actually sustain high quality Health Care Systems and social security systems it requires change and we discuss this very R we have here five current and former Finance ministers who've gone through years of discussion at the G20 at the IMF we spend a lot of time

 talking about monetary policy we spend very little time talking about fiscal policy reforms for a more secure future oh on on that can I just say on that point um fiscal reform in the United States very difficult to do we now have $34 trillion of debt $34 trillion of debt the interest on it is approaching our defense budget and if we don't resolve this in the near future Uh something's going to happen to the dollar the dollar has been the only Reserve currency for quite some time but if the United States can't get its

fiscal act together at some point people are going to do what they did to the British pound and the Dutch Gilder years ago when too much money was Borrowed by those countries and that their their currency didn't become as valuable and therefore lost its Reserve status the US doesn't have any real Challenger right now to reserve currency status for the dollar but it will if it keeps doing what it's doing we have 122% of our GDP in debt and we are each year our budget deficit is probably about 25% of our our

spending and we just can't keep doing that but there is nobody in the United States government that I see is really seriously addressing that problem and it will be a big problem in the not too distant future thank you Dr Ang GOI well maybe you're pointing to me because I was nodding so much when T was talking and that's why he's a favorite I mean we have to look at what we need to do on the fiscal side to finance the green transition the money isn't coming the amounts are huge in the trillions needed

(38:18) um you know you take Africa for instance it needs $190 billion do to finance per year up to 2030 to finance the green transition what is it getting now minute amounts how is it going to be raised so we have to think of sensible things like how do we raise that money so that's one the second is business they're facing a lot of regulatory fragmentation there are 73 different carbon taxing and pricing regimes in the world today they are confused when they go from one country to the other they have to think about a different way and

a different system so how do we bring this together so if we have a common methodology or framework for a Go Global carbon pricing regime I think that will help and then we can use some of those resources that would be raised to help Finance the green transition in those vulnerable countries that don't have the resources so that was why I was not in so vigorously and I think developing countries need to get behind it we've now the international financial institutions have all been working on this in parallel the IMF the World Bank

the WTO the oecd and finally we are coming together in one task force to try to see if we can put all our energies together and develop a common methodology of framework we know that not every country is going to have a carbon price tax the US will never do it they have they will approach it through regulation and subsidies and other means but once we have a common framework we can all measure what we're doing against that and more importantly we can transfer some of the resources raised to help Finance the green transition so

thank you for raising that ter yeah Dr I know you have to leave in a couple of minutes because you have an important meeting so very quick question to you why has it been so slow is it because we're distracted with other crises and are you conf ID that actually all of this is going in the right direction well it's so slow because I mean when you talk of raising taxes Sur price it's never a popular subject anywhere as tan said you have so many former Present Finance ministers on the panel we know

what this means it's politically difficult to talk about raising taxes it's also politically difficult to phase out subsidies we tried it when I was in a Finance Minister in Nigeria and we wanted to phase out our subsidies we went halfway but it was very politically sensitive so that is why you don't hear great enthusiasm when you talk about raising taxes or phasing out subsidies but I think the world we need to take some hard decisions you canot have a situation in which you have $1.

2 trillion in fossil fuel subsidies a lot of it is in developed countries by the way not developing and then we are trying to look for peanuts for a loss damage fund you have over 600 billion in trade distorting agricultural subsidies and we are looking for peanuts for a loss and damage fund when we get 200 million we're all happy we need to take those hard decisions but they are not being done because it's politically difficult and politicians will look at the short-term Horizon they want to be reelected right that's the problem thank

thank you so much Dr I know you have to you have to go Minister Al jadan I think few points and I I listened to Mr President and we spoke um briefly before we um came on stage I would like first of all I think let us agree that climate change is real risks from climate change are real and we should work all together to find solutions that would help the planet and the livelihood of people I I think we are all in agreement I remember in 2014 when Baris agreement was reached um developing developed Nations have committed hundred billion

dollar annually for developed countries to deal with climate change and for them to transition out of carbon intensive um energy what have we seen so far almost zero almost zero and I can understand Mr President's uh enthusiasm about carbon tax and how it may change the equation but then he linked it to two things subsidies to those who are in need I agree whenever you raise um cost um on on your community or others you need to look out for the less fortunate and and provide social safety net agreed the second caveat Mr

President said is we need to find a way that we Channel part of that to low-income countries we tried that and it's failed now so trying something else similar to what you have tried before and expect different results it's very difficult there are a lot of political resistance from developed Nations politically internally I mean we have heard just now um some of the comments so to say that we will put the tax but then we will direct some of it to low low-income countries is going to be very difficult politically extremely

difficult third I would just remind ourselves that while we are enjoying the hated conference place here there are over 600 million people in Africa that have no basic electricity not intermittent basic absolutely no electricity so to say to them go and eat cake why are you you know looking for a bread is hypocrisy in my opinion they have their own own endowment who should help them get that endowment from under their feet gas for example let them fuel their own transition allow them to use their own endowment help

 them to use their youth Empower their youth resk their youth train their youth that is really what is going to change Africa and other low-income countries thank you very much thank you so much Minister Lindner um I hope nobody tells my Coalition partners and uh colleagues in cabinet that we are here considering raising taxes uh would cause serious problems for me domestically um seriously um I would like to to widen the perspective a bit uh I completely chare the idea of um fighting um Global uh warming by ambitious action but we should um think

about the the right methodology I think there is an alternative to carbon tax and the alternative is a carbon Market um in Germany it is extremely costly to avoid uh further emissions and I wonder if the same amount of money we have to spend in Germany would have an even better effect um um on other places um at other places um on the world for example uh to invest in electricity production in Africa with reable energy um as part of a compensation of um German steel industry and for their uh emissions could have

 globally better effect um with lower investment and it doesn't matter where carbon dioxide is emitted it is a global challenge so probably uh we uh should ask oecd to work on a common framework for a global carbon Market um as they did successfully on the um Global minimum taxation if I'm allowed to I would like to add a second uh remark um to finance all our needs for transition fighting uh poverty and to prepare for for the Aging societies I think there's there's one solution um given the demographics given

the investment uh needs uh I think we have to Foster our productivity and this is why I'm advocating for structural reforms um in the labor markets um in technology cutting red tape being more competitive when it comes to corporate Taxation and well um obviously I'm I'm talking about the reform agenda of Germany but I think others have to face similar uh challenges uh we in Germany we have to do our homework and probably we are part of a model uh because others have uh similar challenges uh we had to to solve

our debt and deficit uh issues uh which um has um made me uh becoming the loneliest Minister and cabinet uh but we succeeded uh to solve our debt issues and now we have to to strengthen the supply side and I know what some of you are thinking um Germany probably the sick man Germany is not uh the sick man Germany is after a very successful period since 2012 and these years of of Crisis Germany is um um a tired man uh after a short night and the uh low growth ex uh um expectations are partly a wakeup call and now we have a good cup

of coffee which means structural reforms and then we will be continuing to succeed economically thank you so much Minister we only have 5 minutes left so I'm going to call on Madame lagard and then um David's president and minister so thank you very much I I would like to flag a couple of areas where I think there can be hope and there can be trust if we deliver and I'd like to start with two observations as a followup to tmen your point is well taken about taxation tmen but but you have in in this panel in the discussion we're

having a good example of how difficult it is because tax issues present a huge heterogeneity whether you're sitting in one country or the other you can have a tax burden of 50% of GDP or 10% of GDP and you're starting from a completely different picture so that should be taken into account second there are currently instruments that have been laboriously negotiated at the oecd level to put in place those two pillars one that institutes a minimum corporate Taxation and the other one that proposes to allocate profits of large corporates

around the world on the basis of of where the activity is generated these agreements have been approved at the oecd level they just need to be ratified so it's there let's get on with it and move because otherwise we will move to more fragmentation of tax and we are seeing it with the carbon tax border adjustment here and there and that would be more cacophony added to the risk that we see and that come that takes me to my second area where I think there is hope if we I'm sorry that en GOI had to go

because it touches on trade everybody will agree no matter how much we talk about de globalization that globalization had massive positive impact in pulling people out of poverty hundreds of millions if we listen to AJ bonga from the World Bank this this virtuous path on which we were heading is now at best stable at worst declining more poverty than less poverty well if we look at trade and the decoupling or the drisking however we want to call it it implies two things one there will be different and new sources of supply and

new patterns of trade number one number two because there is more vulnerability associated with Supply it may well be that the cost will be high higher in the long term and maybe that's not such a bad thing maybe we've been relying on this principle of efficiency over security a little bit too much assuming that everything had virtually no cost assuming that labor cost had to be minimal and reduced over the course of time well this can change and maybe can change for the better to bring those people who had the benefit of

 globalization and were taken out of poverty also out of this recessing poverty that is at risk of bringing some of them back down again so I see a lot of positives on those two fronts I had a few other items but I'll save them for next year David and paraphrase uh president of my country ask not what the world economic Forum can do for you but what you can do for the world economic Forum now what do I mean by that the purpose of the Forum and I can't speak for it because clouse is the person who is really the most responsible be able

to speak for it but I can I can say that the purpose of the for this purpose is to inspire people what we've tried to do in this panel and in other panels around the world economic forum is inspire people and educate people and hopefully when you go back to your country you'll educate yourself about some of the things that we talked about here that you might be inspired to learn more about and try to pick one issue of the ones we talked about where you make yourself not only well educated about it better educated than now but try to make

some difference in your own country to try to bring some forward some of these ideas because the only way we're really going to be effective the world economic forum is we have people that come to the sessions and those people are watching on streaming they are going to take these ideas and do something useful with them by working in their own countries to kind of educate people about these things and that's what I I really hope all of you will do is take something away from this this session and say I'm

(53:49) now inspired to learn more about this issue or that issue and I'm going to try to do something in my country to make it more likely that that will happen thank you thank you in 30 seconds or one minute Mr President what are you positive about so I agree entirely that we need carbon markets that itself is a complex Endeavor but we need to develop it and we need to make it Global it's not a substitute for carbon taxes for a very simple reason governments are going to have to invest significantly more than

they've invested before we want the private sector to fund most of the transition but about a third of the investment is going to have to come from government because of externalities and other reasons it has to be funded it has to be funded and we can't there's no magical thinking here funding requires taxes of one form or another the alternative is more and more borrowing which Christian will be the first to agree is not sustainable so let's not duck the issue our real challenge is political it is unpopular to raise any

taxes you have to design taxes together with subsidies so as to make it acceptable and fair and that's the task of Finance ministers and we've got to coordinate this as much as best as possible globally so there are no leakages design taxes and subsidies so that we can get ahead on this invest at a higher level and make it fair for Ordinary People the developing world I quite agree with both aladon and Christ and and um um uh uh Christine it is an opportunity we have the opportunity in fact of growing green

(55:32) energy powered industry in parts of the world which have lots of sun and wind we have the opportunity of shaping growth strategies that are sustainable but it's going to require investment it's going to require support from the advanced world going to require a much enhanced role for the International Financial in Institution utions we can achieve it so all I'm saying at the end of the day is our political antenna have gotten Too Short we're all looking at the next elections in a whole range of countries

and the consequence if we carry on that way is going to be much more pain in future and a much higher hurdle that we need that future politicians will need to cross so let's start moving now phas things in realistically make sure that fair and just and avoid piling up a large problem for the future thank you so much Mr pres you got the optimistic guide to 2024 and the pessimistic guide to 2024 and Beyond thank you so much to all of our panelists and um I would love if the audience could also stay in their

seat also the panelists because it's my great pleasure to welcome on the stage the president of the world economic Forum Bor brend for the closing remarks of this 54th World economic forum thank you uh very much uh to this excellent uh panel I think you revived a bit of optimism but also a lot of realism I remember when I was a young student in economics it was said that if you bring five economists in the same room it would be eight different opinions I think uh we could get some real consensus takeaway uh from this

panel especially when it comes to rebuilding trust and that is also the theme uh of this annual meeting so on behalf of our uh chairman uh Professor uh Claus Schwab managing board uh including myself I would really like to use this opportunity to thank you for your active participation in the world economic forum's 54th and annual meeting in Davos this year's meeting um came at a critical and complex moment not only for the world but for each person in it something that was also eluded by um the panel also

underlining the importance of inclusion Rising global temperatures a still fragile economy and a derating security landscape are challenges that are not bounded by borders they affect us all there's no longer such a thing as a country company or Community insulated from Global shocks and when it comes to leveraging Opportunities it is not possible to do so alone yet we know the foundation of cooperation trust has been eroding in recent years which is why this week's meeting on rebuilding trust has been so

important leaders from around the world from the public and private sectors and from across Generations gathered to show what can be achieved by working together and I'm really heartened to see the impact the annual meeting hosted hosted 3,000 leaders including 350 heads of state and governments and ministers the presence of top government leaders alongside major cosos across all Industries fostered a new spirit of solidarity and cooperation even among those with different perspectives it enable the F to continue

 its tradition of providing a space for for diplomacy more than 80 National Security advisers from governments and international organizations met in Davos ahead of the meeting to advance a blueprint for peace and world leaders voic their support for president selinski and Ukraine we hosted leaders from across the Middle East with the aim of supporting efforts to low tensions and Advance a path to peace the forum's friends of the African Continental free trade area launched the first ever private sector action plan we convened

leaders from the Western Balkans and the EU who reiterated their commitment to a common European future underpinned by regional growth and stability and the humanitarian and resilience investing initiative announced over 50 commitments that will boost impact investment and could unlock over 15 billion in Frontier markets the meeting focused on Reviving The growth needed to strengthen our economies and societies the future of growth initiative supported by a new framework that looks beyond GDP growth will be a

two-year campaign to help policy makers and economists share new ideas and best practices to balance growth with Innovation inclusion sustainability and resilience goals the Trade Tech Global initiative outlined a vision for the collaborative use of technology for Global Commerce to unlock trillions in trade new insights on the future of global fintech chartered a path to resilient and inclusive growth in the industry and the future of industrial strategies initiative shed light on the opportunities for companies and

governments to co-create the next generation of industrial strategies participants made significant progress on climate action nature protection and energy transition the first movers Coalition has grown to almost 100 companies providing the world's largest demand signal for breakthrough climate technology IES in high emission industry sectors such as steel and cement and the world economic forum's trillion trees platform that I know many of you are very committed to announced over 100 companies pledging to

conserve restore and grow 12 billion trees The Firm launched a network for to mobilize clean energy investment for the global South to help unlock an estimated 3 trillion needed for the energy transition the global plastic Action Partnership welcomed Colombia and the Philippines bringing the network of National Action Partnerships to 14 technology and particularly AI was top of mind and participants proposed balancing Innovation and protection to ensure responsible development the AI governance Alliance announced a new

Global effort to increase AI access the center for the fort industrial revolution that we have created expanded with new centers in Germany Vietnam and Qatar and intends amongst others to launch also know a center in Ukraine in Kia Uplink raised 43 million in funding to help early stage impact entrepreneurs scale their people and Planet focused Ventures and the global collaboration Village that I hope you all visited demonstrated the potential of Next Generation technology to drive inclusion and sustainability none of these

developments can be Advanced without investments in people and Equitable opportunities the r Skilling Revolution initiative announced that it has reached more than 68 80 million people with opportunities for improving education skills and job opportunities and the Philippines Vietnam and Qatar have joined a growing network of 20 country accelerators focusing on human capital Investments The Forum launched a new Global Gender parity Sprint to accelerate economic parity by 2030 engaging five Industries and 15 country

accelerators the Edison Alliance announced it has improved the lives of 784 million people through 320 initiatives across 127 countries on closing the digital divide and the Global Alliance For Women's Health announced 42 organizations and have pledged 55 million to improve Women's Health and outcomes worldwide and now I have cut three pictures on the list here of other initiatives I think the reason why I'm mentioning all this is showing that our annual meeting is also about impact and it's also about

walking the talk and I'm really proud of what we have achieved in Davos in just a week it is a proof that cooperation can and deliver results now is the time as we look a year ahead to scale this progress I look forward to seeing the Forum continue to work with all of you on these init initiatives throughout the year so that when we meet again a year from now we will have made measurable progress on advancing our economic environmental and security priorities at the end I would also like to thank those that have worked so

hard on making this annual meeting um a reality and a special thank to my colleague mck dusk that is in charge of the annual meeting and his team doing uh the programming and the events really a big big thank you and I would also like to thank all my colleagues at the world economic Forum that have wor 247 in making this happen it's very rewarding but I think we're all looking forward to not wake up at 5:30 tomorrow morning so safe travels back home and again big thank you to this excellent panel thank

 

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