Davos Diary: As the WEF party rolls out of town, a tale of two Davoses

A Swiss national flag waves in the wind on the last day of this year’s World Economic Forum annual meeting, in Davos, Switzerland. (AP Photo)
Updated 26 January 2019

Davos Diary: As the WEF party rolls out of town, a tale of two Davoses

  • There is something sad about the Congress Hall on the last day of the World Economic Forum Annual Meeting
  • The corridors and staircases that throbbed to the chatter of the ‘masters of the universe’ are poignantly silent

DAVOS: The Central Lounge is thinning out, the Global Situation Space is deserted. The Public Figures Lounge — the abode of the global elite these past few days — is spookily vacant, though the specter of Tony Blair still hangs in the air.

The Davos party is over, and it is time to call it a day.

There is something sad about the Congress Hall on the last day of the World Economic Forum Annual Meeting. The corridors and staircases that throbbed to the chatter of the “masters of the universe” are poignantly silent. Even the Swiss cloakroom attendants — the most efficient and welcoming WEF staff — are bored and looking at their watches for the last shuttle back to base camp.

To hear some cynics talk, that’s more or less how it was for the duration of the annual meeting. “There’s nobody here this year” was a common refrain. “Everyone has stayed away” was another.

Well, if by everyone you mean the presidents of the US and China, I suppose they have a point.

While there was plenty going on at Davos 2019, it did lack the big beasts that attended the past couple of years. There was no real focal point, no plenary session you simply had to attend.

Actually, this made the main drag of the Congress Hall a rather more pleasant place to be. It was easier to get around, and it was possible to find some space to work or have a quiet conversation.

But in many ways, it was a tale of two Davoses. Outside the Congress, in the snowy streets and promenades of the Alpine resort, it was if anything more hectic than ever.

The Belvedere, as ever, was the hub of this activity. How much longer the Steigenberger hotel can fulfil this role must be open to question. On Wednesday night, the place was absolutely packed, its narrow corridors and comparatively small salons and cafes bursting at the seams.

One British wag compared it to the intergalactic bar in the movie “Star Wars,” where furry monster aliens got involved in fist-fights. An exaggeration, but not by much.

Outside the Belvedere, the WEF-izaton of Davos was almost complete. Virtually every shop, cafe and restaurant on the Promenade, the town’s main thoroughfare, was taken over by a bank, or a management consultancy, or sometimes a whole country — Ukraine, Poland and Russia rubbing shoulders uneasily in converted stores — for the duration of WEF. I wonder what the Promenade looks like for the rest of the year?

One notable exception is the souvenir shop across the promenade from the Morosani Schweizerhof hotel. The local lore is that the proprietors have no need of the inducements of the WEF because they already make a fortune during the week. Even the global elite have to buy their fake Swiss gold bars, Davos mugs and tacky Swiss branded fondue sets somewhere.

The nighttime hustle along the Promenade seems to get more hectic every year. My big regret at Davos 2019 is that I did not make it inside the legendary Piano Bar in the Hotel Europe, a must-visit every previous year.

I got to the hotel, but security staff refused to admit any more would-be crooners to the bar. A quick peek around the door showed why — it was jammed to the rafters with furry aliens and green creatures with two heads.

  • Frank Kane is an award-winning business journalist based in Dubai. Twitter: @frankkanedubai

IMF downgrades outlook for world economy, citing trade wars

Updated 15 October 2019

IMF downgrades outlook for world economy, citing trade wars

  • Growth this year will be ‘weakest since the 2008 financial crisis,’ according to 2020 forecast

WASHINGTON: The International Monetary Fund is further downgrading its outlook for the world economy, predicting that growth this year will be the weakest since the 2008 financial crisis primarily because of widening global conflicts.

The IMF’s latest World Economic Outlook foresees a slight rebound in 2020 but warns of threats ranging from heightened political tensions in the Middle East to the threat that the US and China will fail to prevent their trade war from escalating.

The updated forecast released on Tuesday was prepared for the autumn meetings this week of the 189-nation IMF and its sister lending organization, the World Bank. Those meetings and a gathering on Friday of finance ministers and central bankers of the world’s 20 biggest economies are expected to be dominated by efforts to de-escalate trade wars.

The new forecast predicts global growth of 3 percent this year, down a 0.2 percentage point from its previous forecast in July and sharply below the 3.6 percent growth of 2018. For the US this year, the IMF projects a modest 2.4 percent gain, down from 2.9 percent in 2018.

Next year, the fund foresees a rebound for the world economy to 3.4 percent growth but a further slowdown in the US to 2.1 percent, far below the 3 percent growth the Trump administration projects.

IMF economists cautioned that that even its projected modest gains might not be realized.

“With a synchronized slowdown and uncertain recovery, there is no room for policy mistakes, and an urgent need for policymakers to cooperatively de-escalate trade and geopolitical tensions,” Gita Gopinath, the IMF’s chief economist, said in the report.

Last week, the US and China reached a temporary cease-fire in their trade fight when President Trump agreed to suspend a tariff rise on $250 billion of Chinese products that was to take effect this week. But with no formal agreement reached and many issues to be resolved, further talks will be needed to achieve any breakthrough. The Trump administration’s threat to raise tariffs on an additional $160 billion in Chinese imports on Dec. 15 remains in effect.

The IMF’s forecast predicted that about half the increase in growth expected next year will result from recoveries in countries where economies slowed significantly this year, as in Mexico, India, Russia and Saudi Arabia.

This year’s slowdown, the IMF said, was caused largely by trade disputes, which resulted in higher tariffs being imposed on many goods. Growth in trade in the first half of this year slowed to 1 percent, the weakest annual pace since 2012.

Kristalina Georgieva, who will preside over her first IMF meetings after succeeding Christine Lagarde this month as the fund’s managing director, said last week that various trade disputes could produce a loss of about $700 billion in output by the end of next year or about 0.8 percent of world output.

IMF economists said that one worrying development is that the slowdown this year has occurred even as the Federal Reserve and other central banks have been cutting interest rates and deploying other means to bolster economies.

The IMF estimated that global growth would have been about one-half percentage point lower this year and in 2020 without the central banks’ efforts to ease borrowing rates. “With central banks having to spend limited ammunition to offset policy mistakes, they may have little left when the economy is in a tougher spot,” Gopinath said.

In addition to trade and geopolitical risks, the IMF envisions
threats arising from a potentially disruptive exit by Britain from the EU on Oct. 31. The IMF urged policymakers to intensify their efforts to avoid economically damaging mistakes.

“As policy priorities go, undoing the trade barriers put in place with durable agreements and reining in geopolitical tensions top the list,” Gopinath said. “Such actions can significantly boost confidence, rejuvenate investment, halt the slide in trade and manufacturing and raise world growth.”

The IMF projected that growth in the 19-nation euro area will
slow to 1.2 percent this year, after a 1.9 percent gain in 2018. It expects the pace to recover only slightly to 1.4 percent next year.

Growth in Germany, Europe’s biggest economy, is expected to be a modest 0.5 percent this
year before rising to 1.2 percent next year.

China’s growth is projected to dip to 6.1 percent this year and 5.8 percent next year. These would be the slowest rates since 1990, when China was hit by sanctions after the brutal crackdown on pro-democracy demonstrators in Beijing’s Tiananmen Square.