I get knocked down, but I get up again
You’re never gonna keep me down
The above lyrics by Chumbawamba are pertinent as the Global World Economy is going through a fragile phase, with the possibility of multiple shocks that can have an impact on the growth outlook for 2023.
This year’s summit of the World Economic Forum at Davos brings 2,700 leaders from 130 countries, in its 53rd edition, and the voices and thought leaders of the world are coming together to discuss and ideate how they can bring the world back to its growth stage.
We at TDB have put together some of the Key Messages from this global forum as it unfolds this week.
The Key Messages
- The International Monetary Fund Managing Director Kristalina Georgieva said in an IMF blog post earlier this week that “Cooperation in Fragmented World” is much needed as Fragmentation could make it even more difficult to help many vulnerable emerging and developing economies that have been hard-hit by multiple shocks. Exploring synergies and cooperation remains a top agenda at the World Economic Forum at Davos 2023.
- The slowdown in the global economy is also a major theme at Davos 2023. Geopolitical tensions, soaring inflation, and a high-interest rate regime are slowing down economies around the world, and officials are together to share their views on this.
- Technology is a hot talking point and discussions are focused on themes ranging from cybersecurity to digital inclusion and the metaverse.
- Building consensus on how to create a more sustainable world will take collective global action on shared interests and the forum at Davos is bringing together government and business leaders to take the agenda forward.
Cooperation in a Fragmented World
The World Economic Forum’s latest Global Risk Report highlighted recently that in the next two years, the cost-of-living crisis is seen as the biggest risk, while over the next 10 years, environmental risks dominate.
The WEF meeting at Davos has the overarching agenda of reflecting on some of the biggest crises in front of us. As the meeting overview explains: “The world today is at a critical inflection point. The sheer number of ongoing crises calls for bold collective action.”
As the event unfolds, we are clearly seeing more recognition of the fact that this cooperation does not mean just government’s across the world spending trillions of USDs to build global infrastructure. It means a conscious collaboration between governments and private sectors and an engagement of the wider community.
The agenda has been well captured by statements from Klaus Schwab, Founder, and Executive Chairman of, the World Economic Forum who said, ”We see the manifold political, economic, and social forces creating increased fragmentation on a global and national level. To address the root causes of this erosion of trust, we need to reinforce cooperation between the government and business sectors, creating the conditions for a strong and durable recovery. At the same time, there must be the recognition that economic development needs to be made more resilient, more sustainable and nobody should be left behind.”
The world waits and watches on how the WEF at Davos 2023 will renew this spirit of cooperation and collaboration.
Recession and its long shadow
The outlook for the global economy is gloomy at the moment. A survey of economists released on the opening day of Davos shows heightened global recession fears. There are fears that Europe is at the center of this recession cycle led by high energy prices, increasing interest rates, and sluggish demand.
Global enterprises have announced layoffs and economists are expecting more job cuts in the coming months.
However, some bright spots are beginning to emerge. With China opening back its economy and cutting down on its Covid restrictions, GDP in the country and demand from the country is expected to rebound. India has remained remarkably resilient to the deteriorating external environment. Middle East and North Africa, while slowing down versus 2022 is still showing some resilience and robustness.
Facilitating trade between the world is another way to promote growth. Trade growth is expected to decline in 2023, which makes it even more critical to roll back the distortionary subsidies and trade restrictions imposed in recent years. The World Economic Forum is a good place to begin some of these conversations and move them forward in the months to come.
Harnessing the power of Technology and an accelerated Digital Transformation of the world can give a much-needed impetus to the world and is expected to add USD 100 trillion to the World Economy by 2025, according to the World Economic Forum.
Countries and regions which can pool their intelligence, resources, and capabilities between the public and private sectors will advance the fastest in this domain. Digital transformation will also transform the workforce landscape in the years to come. Governments and organizations are discussing and implementing ways to upskill and reskill to help create more resilient workforces.
Cybersecurity is turning out to be a major topic of discussion at the WEF 2023. “This is a global threat, and it calls for a global response,” said Jürgen Stock, INTERPOL Secretary-General. The Digital Banker covered Cyber Security in its latest publication here. Creating a Cyber resilient infrastructure and developing a so-called Zero Trust approach to cybersecurity which creates a framework that eliminates implicit trust and ensures that any user—even those who are supposed to be inside an organization’s network—is authenticated and validated at every turn, remains the need of the hour.
Launched at the Annual Meeting in Davos 2022, Defining and Building the Metaverse is the world’s foremost multi-stakeholder initiative to develop and share actionable strategies for creating and governing the metaverse. Representatives from across the world identify the need to use Metaverse for the global public interest. This year the WEF has launched at Davos its metaverse platform Global Collaboration Village, in partnership with Accenture and Microsoft. The platform is a working prototype where organizations can convene on the metaverse and learn about, and create solutions for some of the present pressing challenges.
The immersive nature of the Global Collaboration Village has the potential to create a powerful and efficient means to drive global progress. Inclusive and responsible by design, it will be a creative place to imagine alternative futures, explore ideas and systems transparently and safely, and envision what the future of engaging multistakeholder collaboration could be, the WEF said.
There exist inextricable links between the climate crisis, nature’s collapse, the energy transition, and global food security. There is a pressing need to see how new approaches and partnerships can lead to new solutions -to meet the 2030 emission reduction targets.
For enterprises, comparable sustainability information and metrics to capture, benhmark and report sustainability data and carbon footprint is becoming increasingly important. However, navigating this array of frameworks, standards and tools has posed a significant challenge to reporting organizations. The WEF has been working on Stakeholder Metrics (SMs) – a sustainability reporting tool for national and international businesses in the region to get started on or enhance their sustainability reporting journey. There are many conversations in Davos at the moment around these metrics.
Securing net zero in this period of turbulence is a challenge many business leaders face and new approaches to risk modeling, assessment, and allocation could help businesses, governments, and financial markets overcome these barriers and hasten the transition. These are conversations increasingly coming into focus at Davos 2023 and we will see their application into sustainability projects in the year ahead.
Author: Nishtha Asthana
Featured image credit to: Poetra.RH / Shutterstock.com