Economic perspectives from Davos

Jock Mendoza-Wilson shares his thoughts on the Annual Meeting 2013

Coming back to the office and reality after four days on Magic Mountain lends itself to finding perspective about the discussions and debates that took place at the World Economic Forum Annual Meeting in Davos. The biggest challenge is trying to distil just what those four days of meetings amounted to in terms of knowledge, learning, and useable information and relationships.

Firstly, the tone in Davos seemed more upbeat than in recent years. The positive growth figures for China and the US, and a return to stability of sorts in Europe as the confidence in the euro increases, made for a better mood regarding the global economy. As you might expect, with the strong economic performance of China and the US, the talk was of a bipolar world with extensive discussion on of the rise of a very small club, the G2, rather than the influence of the G8 or G20.

One of the buzzwords heard this year in Davos was the idea of the “Great Rotation” – meaning the rise of China back to its global economic dominance and the relative decline of the US and Europe. The winners of this sea change in global economic leadership will be China’s neighbours. The loser will likely be the West as global income is redistributed eastwards.

Large global companies already get this. It was fascinating to hear Renault Nissan CEO, Carlos Ghosn, talk clearly about his business’s strategy to deal with this through investment in emerging markets and low-carbon cars, and his optimism for growth in China, Brazil, Russia and India.

At Davos, the mood regarding Europe was one of cautious optimism, with a clear sense that the worst was over, especially with the fracturing of the euro no longer a subject that exercised debate. Whether the EU could grow, how indebted economies could deal with their debt and return to growth, and what policy mix might achieve this, were hot topics (see the Forum’s Rebuilding Europe’s Competitiveness report).

However, there were no real outcomes, other than the need to cut debt and continue to restructure and reform often bloated and inefficient state sectors. And, in particular, to cut social payments and liberate labour markets from constrictive red tape to allow Europe to compete against the emerging East and South.

The issue of  trust, who has it and how to gain it, was also under debate with politicians and business leaders recognizing that improved ethical standards and transparency were essential if voters and consumers were to place faith in the motives, policies and actions of government and business.

Author: Jock Mendoza-Wilson is Director of International and Investor Relations at System Capital Management, a leading financial and industrial group headquartered in Ukraine. He is also Chair of the UN Global Compact in Ukraine.

Image: Silhouette of a woman as she passes by a sign of the annual meeting 2013 in Davos REUTERS/Pascal Lauener