(From left) WEF president Borge Brende, International Monetary Fund (IM) Managing Director Kristalina Georgieva, Qatar's Foreign Minister Mohammed bin Abdulrahman Al Thani, Finland's Foreign minister Pekka Haavisto, Saudi Foreign Minister Prince Faisal bin Farhan and US Democratic Senator from Delaware Chris Coons attend a session at the World Economic Forum (WEF) annual meeting in Davos on Jan 17, 2023.
(FABRICE COFFRINI / AFP)
DAVOS, Switzerland- The year ahead looks better than feared for the global economy but remains fraught with risks including escalation of the conflict in Ukraine and the emergence of a transatlantic trade war, the World Economic Forum's final panel concluded.
International Monetary Fund (IMF) Managing Director Kristalina Georgieva told the Davos audience that what had improved was the potential for China to boost growth.
While that was likely to prompt the IMF in coming days to upgrade its current forecast of 2.7 percent growth for the year ahead, she cautioned against expecting any "dramatic improvement" on that figure.
The week-long meeting was dominated by debate on a brewing dispute between the United States and Europe on subsidies for green energy transition, the growing debt distress in developing nations and abundant geopolitical risk around the planet
The week-long meeting was dominated by debate on a brewing dispute between the United States and Europe on subsidies for green energy transition, the growing debt distress in developing nations and abundant geopolitical risk around the planet.
Former US Treasury Secretary Larry Summers said the Biden administration subsidies package and the planned effort by Europe on tackling climate change at least represented a long overdue stepping-up of activity on the green energy transition.
"A subsidy war about a very good thing is good," he told the panel. "That is a very healthy kind of competition relative to all the kinds of competition the world has seen," he said, urging fair competition that did not "wall off others and try to take down others".
Wall Street executives in Davos said pessimism had eased as economies in the US and Europe stayed resilient and China loosened its COVID-19 policies.
Describing 2022 as a "weird, weird year when you look at it", European Central Bank (ECB) President Christine Lagarde called on governments to ensure that fiscal policy did not make the job of central bankers harder by heating up the economy.
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"'Stay the course' is my mantra on monetary policy," she said, reaffirming that the ECB planned to continue tightening for as long as needed.
Meanwhile, World Trade Organization Director general Ngozi Okonjo-Iweala said on Friday it was sticking with its 1 percent projection for global trade growth in 2023 – for now.
She said the WTO was not revising down its projection. The next assessment will be in April, she said.
World trade is thought likely to have lost momentum in the second half of 2022 and to remain subdued in 2023 as multiple shocks weigh on the global economy.
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In October, WTO economists predicted a 1 percent increase in global merchandise trade volumes for 2023, down sharply from the previous estimate of 3.4 percent.