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
- More information on the World Economic Forum Annual Meeting 2011: http://www.weforum.org
“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.
Maurice Levy, Chairman and Chief Executive Officer, Publicis Groupe, the international advertising and communications company, said that he is particularly concerned about surging asset prices in China and other leading emerging markets, which are being driven by the extremely fast growth of cities. “Where you have unremitting growth, you get crises,” he warned.
In part, the leap in global commodity prices, which has already triggered fears of political unrest in some developing countries because of soaring food costs, is linked to increasing urbanization, participants were told. Although rises in commodity prices can have the advantage of encouraging greater technological innovation, not all commodities can be easily substituted.
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..
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.
Notes to Editors
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