World Economy

WEF Business Begins in Davos

WEF Business Begins in DavosWEF Business Begins in Davos

The world’s elite got down to business on the first day of the World Economic Forum on Wednesday, in the tiny Alpine town of Davos, Switzerland.

Iranian President Hassan Rouhani’s chief of staff, Mohammad Nahavandian, and Foreign Minister Mohammad Javad Zarif  are attending the Forum in Davos. 

A total of 2,500 world’s powerful businessmen, heads of state, and even celebrities will be attending the 45th annual Davos ‘World Economic Forum’ to discuss business from January 21-24.

The theme of this year’s conference is ‘The New Global Context’, oil prices, climate change, the rise of China, deflation across the eurozone, the Russia-Ukraine conflict, and income inequality are set to top the agenda.

Klaus Schwab, the 76-year-old founder and president of the World Economic Forum, said in his speech that the event is a common environment for communities and business to cooperate, stressing that at a time numerous crises, conflicts and economic problems are raging its vital to rebuild trust and stable regulation.

The acute fall in oil prices and oil’s impact on the global economy featured heavily in discussions at the Forum. Most participants agreed the scale of the fall to below $50 a barrel — around 60 percent since last June — represents a big boon for the global economy, especially to net importers of oil such as the United States, China, Japan and the 19-country eurozone, ABC reported.

The latter, which is stumbling along from one anemic quarter to the next, needs all the help it can get, even with European Central Bank President Mario Draghi expected to announce some stimulus Thursday.

Clearly not all economies stand to benefit — and Russia may be the country most negatively affected by the sharp slide in oil prices. The International Monetary Fund warned this week that the Russian economy could contract 3 percent this year.

Russia’s deputy prime minister, Arkady Dvorkovich, hoped that the fall in oil prices would soon end, saying only then would Russia’s currency, the beleaguered ruble, find some support.

China’s top central banker, Zhou Xiaochuan, also hoped some stability would return to oil prices and noted a potential negative side effect — it makes investing in alternative energies such as wind or solar power relatively less attractive. In a year when climate change is high on the international agenda, that’s not helpful.


The top economists clashed over the impending decision by the ECB to buy up sovereign debt, an unprecedented measure to fight deflation that powerful Germany believes would merely allow overspending eurozone states to put off reforms, AFP said.

Europe has squandered three years of opportunity to carry out badly needed economic reforms, former Bundesbank chief Axel Weber said at a panel in Davos.

“The real issue is the ECB has continuously bought time for European policy makers to fix the issue,” Weber said, reflecting the views of many in the current German government.

But “they didn’t do that”, said Weber, who famously stormed out of his job at the Bundesbank when the ECB unveiled unconventional measures in late 2011.

The ECB holds its first policy meeting of the year on Thursday and is widely expected to announce some sort of buy-up of sovereign debt, a measure known as quantitative easing (QE).

However, in the eurozone, growth remains sluggish, unemployment is high and the is in danger of sliding into deflation, forcing the ECB to consider deploying QE,widely credited with having helped boost the US and British economies.

Europe’s leaders came under attack at the WEF for failing to boost growth in the region as the US was hailed for turning around its economy.

Europe’s politicians are relying too much on monetary policy instead of taking electorally painful steps to revamp labor markets and improve competitiveness, delegates to the conference said.

Meanwhile, Ukrainian President Petro Poroshenko said that more than 9,000 Russian soldiers were currently backing up pro-Moscow fighters in the separatist east of the country.

“We have more than 9,000 troops of the Russian Federation on my territory, including more than 500 tanks and heavy artillery and armed personnel carriers,” Poroshenko told the World Economic Forum.