5 big economic stories on the agenda at Davos

Investors look at computer screens showing stock information at a brokerage house in Shanghai

Investors look at computer screens showing stock information at a brokerage house in Shanghai, Image: REUTERS/Aly Song

Marjo Koivisto
Programme Lead, Economics and Finance, World Economic Forum
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One. As 2016 gets underway, economic and financial leaders face a dual challenge: how to realize the opportunity of the Fourth Industrial Revolution, while facing the challenge of unstable market and monetary policy outlooks? The Davos economics and finance agenda opens this year just as equities markets in both the advanced and largest emerging markets economies posted the worst start to a year since the great recession. At the same time, the oil price fell below $30 per barrel for the first time in 12 years, and monetary policy divergence between major advanced economies provides a context for jitters spreading through sovereign and corporate bond markets around the world. (Watch: “Preventing Future Shocks”) Throwing a spotlight on monetary policy, the programme will feature a conversation about whether central banks broken the link between markets and the real economy (Watch: “The Growth Illusion”) Regressing productivity across advanced economies has dominated headlines over the past years, but this year the same concern shifts to the double-digit growth markets, reaching to manage economic diversification and competitiveness.

Two. A key item on the global economic agenda this year is the contagion effects between slowing emerging markets and monetary tightening in key advanced markets. Growth markets are still spread around the globe: the latest IMF forecasts advanced markets growth of 2.2 percent, and emerging market and developing economies growth of 4.5 percent in 2016. Leaders at Davos this year will address how local currencies and export markets for high growth markets will be affected by more adverse external conditions, and the eclipse of commodities. (Watch “Emerging Markets Outlook”). The programme also features a key session on China: what 2016 will look like for the world’s second largest economy, which is preparing for the next 5-year plan in the new global market and economic context. (Watch: “Where is the Chinese economy heading?”)

Three. 2016 also provides an exciting opportunity for innovation in platform business and other new digital economies – anywhere. The accelerating pace of innovation in digitized industries is a hot topic. The "sharing economy" market, for example, is projected to reach the size of $335 billion by 2025, and now everyone is interested in why this economy is growing. The Nobel Laureate economist Al Roth joins the Annual Meetings this year to address who gets what and why in specific markets, (Watch: “A Journey of Discovery with Al Roth”) including in these new markets, and there will be a session with the CEOs of today’s unicorns on how the new digital platform businesses can create launch pad for innovations accessible to all. (Watch: “A New Platform for the Digital Economy”)

Four. The excitement about the fintech revolution in financial services – from payments to bitcoin to the distributed ledgers – is a great example of the myriad potentially disruptive innovations characteristic of the Fourth Industrial Revolution. The programme at Davos will bring together players big and small in this space to debate the road ahead. (Watch: “The Transformation of Finance”) What does it mean for non-traditional players entering the field? What types of opportunities for business and operating model innovations are currently emerging in the platform based financial services? (Watch: “Issue Briefing: disruptive forces in financial services”) The global reach of the fintech opportunity is also striking. There are over 340 million households in the developing world alone – what does this trend mean for accessing and using platform based financial services, and who can provision them?

Five. In addition to industry leaders, this year’s Davos economics and finance programme will also engage policy and regulatory leaders on how the right kind of regulatory reforms can foster inclusion whilst averting future shocks. (Watch: “Future Proofing Finance”) As Europe rebuilds confidence in its financial institutions and markets, the President of the European Central Bank, Mario Draghi, delivers a special address on the year ahead for the Eurozone. The United States Treasury Secretary Jack Lew will explore global financial priorities for the year ahead. And last but certainly not least, the yearly Global Economic Outlook on Saturday asks how leaders can address the challenge of global rising income inequality for markets and economic stability in 2016 (Watch: “Global Economic Outlook”).

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