Fon Mathuros, Head of Media, Public Engagement, Tel.: +41 (0)79 201 0211, Email: fma@weforum.org
Tianjin, People’s Republic of China, 10 September 2014 – The global economy has been performing moderately well, but the pace of expansion in the first half of 2014 has been surprisingly weak, panellists concluded at a session on the global economy on the first day of the eighth Annual Meeting of the New Champions in Tianjin, China, on 10-12 September. More than 1,900 participants from 90 countries are taking part.
“This may say something about the future,” cautioned Min Zhu, Deputy Managing Director, International Monetary Fund (IMF), Washington DC; World Economic Forum Foundation Board Member. The IMF is scaling down its 2014 forecast from 3.7% to just about 3%. It will release new projections on 7 October.
“The European Union is struggling more at this time than we have foreseen earlier in the year,” said Victor Halberstadt, Professor of Economics, Leiden University, Netherlands. “Germany will do better than the periphery, but the rest of Europe will perform considerably below trend.” France and Italy, which account for a third of Europe’s economy, need to embark on structural reforms to ensure sustainable recovery.
The big question mark is the timing of the US Federal Reserve’s normalization of interest rates. “Asset prices are being priced with the idea that higher interest rates will be long in coming and slow, but the Fed is saying, ‘no, it’s going to be faster than that’,” said Kenneth Rogoff, Thomas D. Cabot Professor of Public Policy and Professor of Economics, Harvard University, USA. “It might be a shock to the system.”
Still, many countries may be more prepared today for the unwinding of US quantitative easing than they were in May 2013, when the then Federal Reserve chairman Ben Bernanke seemed to indicate that the US was ready to raise interest rates. “All in all, Latin America is ready,” said Luis Alberto Moreno, President, Inter-American Development Bank, Washington DC; World Economic Forum Foundation Board Member.
GDP growth in China, the world’s second largest economy, is slowing, but new engines of growth and structural reforms promise to put the economy on a more sustainable path, said Li Daokui, Dean, The Schwarzman Scholars Program, Tsinghua University, People’s Republic of China. “The slowdown is temporary. If the restructuring is successful, there will be a U-shaped recovery.”
Japan, the world’s third largest economy, is also on the mend. “We are taming deflation,” said Akira Amari, Minister for Economic Revitalization and Minister for Economic and Fiscal Policy, of Japan. The focus now is on the government’s so-called “third arrow” – structural reforms such as the elimination or easing of regulatory barriers and changes in labour policies, including encouraging women to rejoin and realize their full potential in the workforce.
“We need to establish virtuous growth in the economic cycle,” said Amari. “I believe we will succeed.”
A select group of business leaders from the Forum’s Member companies will act as Mentors at the Meeting. They are: Jean-Pierre Bourguignon, President, European Research Council, Belgium; Natarajan Chandrasekaran, Chief Executive Officer and Managing Director, Tata Consultancy Services, India; Dong Mingzhu, Chairperson and President, Gree Electric Appliances of Zhuhai, People’s Republic of China; Paul E. Jacobs, Executive Chairman, Qualcomm, USA; Max Levchin, Founder and Chief Executive Officer, HVF, USA; Young Global Leader; Kevin P. Ryan, Founder and Chairman, Gilt Groupe, USA; and Subra Suresh, President, Carnegie Mellon University, USA.
Notes to Editors:
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