Come winter, the world leaders gather at the coldest place on earth to discuss the hottest topics in the world. Though the main theme of this year’s DAVOS – World Economic Forum (WEF) happens to be ‘Globalization 4.0’. It may well be ‘Localisation 2.0’ given the pressure on global leaders to address their local issues back in their own countries.
The annual congregation of the global elite this time will be less noisy and less glamorous as some of the marquee world leaders are forced to stay home and fight domestic crises than discuss, socialise, clinch deals over glittering champagne in the Swiss Alps.
Not withstanding the absence of these marquee leaders, WEF has to carry on with this ‘Shaping the World Order' agenda. The forum is expected to at least discuss if not address all the issues that the world is facing now including the ‘impending global gloom’ which cannot at this point be labeled a crisis according to the IMF Chief Christine Lagarde.
Though job creation and disruptive technologies are urgent issues that will get attention at the forum. Inclusion and Climate Change Mitigation are in fact the overarching themes of WEF’s Globalization 4.0. It means there has to be consensus built around how to address inequity and mitigate climate change.
This I am assuming is a tall order considering how difficult it is to get everyone on the same page .Yesterday even as the global elite gathered at the ski resort, the media closed in on some of them to get their perspective.
NDTV interviewed Winnie Byanyima of Uganda who happens to be the Executive Director of Oxfam, that published a report on the Global Inequality in wealth distribution. The report says that world's 26 richest people own the same wealth as the poorest half of humanity and it blames governments for not taxing the rich adequately.
To prove her point Winnie Byanyima stated that she travelled ‘economy class’ from Uganda to Switzerland only to interact with the super rich that came in their own private jets. Much like the walkers at the KBR park in Hyderabad who drive down to the park to 'walk‘ there, Hedge Fund billionaires land into Davos in fuel-guzzling private jets to discuss the threat of climate change and economic inequality in contemporary world.
Among other things, the Oxfam report also highlighted the fact that in India the wealth of 9 richest Indians is equivalent to bottom 50 per cent of the country. No sooner that this information was shared, a twitter response was given by Kiran Mazumdar Shaw, one of the richest Indians. She tweeted “shaming wealth creators is wrong it’s in fact government’s responsibility to come out with innovative policies to address the problem".
Speaking of consensus, the new leader of Latin America's largest economy Brazil, Bolsonaro, given his background may not readily align with the World Economic Forum's recipe of cross-border stakeholder cooperation. Other than this challenge of consensus building, WEF has the larger global context to deal with.
It’s not without a reason, for some time now IMF Chief Christine Lagarde was cautioning the world to carry out structural reforms when the global economy is strong. She urged policy makers to "fix the roof while the sun is shining”.
But it seems that we are a bit late now as China’s huge economy, a major driver of global growth has just lost its steam, Europe is weakening and export powerhouse Germany has been substantially hurt by new fuel emission standards for cars and Italy is very much under market pressure due to Rome's recent budget standoff with the European Union.
Needless to say, the International Monetary Fund cut its world economic growth forecasts for 2019 and 2020 while cautioning that failure to resolve trade tensions could further destabilise a slowing global economy. These new forecasts, released on the eve of this week's gathering of world leaders at Davos, show that policymakers may need to come up with plans to deal with this impending slow down.
IMF Managing Director Christine Lagarde statement "After two years of solid expansion, the world economy is growing more slowly than expected and risks are rising," takes me back to how global crisis impacted us locally years ago.
On September 15,2008, when Lehman Brothers Holdings Inc. filed for bankruptcy, the media announced a 'Financial Tsunami'. The collapse of the iconic US investment bank, with $639 billion in assets demolished the world’s financial stability. But India remained largely unaffected. India’s banking system was ring-fenced by its conservative, risk-averse Reserve Bank of India (RBI) Governor Y V Reddy who laid down office just ten days before the Lehman collapse.
He made sure that the banks in India remained unaffected by the crisis that swept through the global financial markets. Notwithstanding how ring fenced an institution is and how fire-wall protected the financial system of a nation, some damage is bound to take place.
This was a personal account of a private bank employee in India who was fired after the collapse of Lehman Brothers. He narrated the sequence of events over a three month period where he saw cheques bouncing, small businesses collapsing, unable to get out of debt trap, managers stretched as business volumes were coming down drastically, cost of living going up every day, inflation touching 13 per cent, staff under constant fear, loan disbursement totally stopping, staff getting pink slips, people reporting sick because of stress, experiencing nightmares of being laid off and finally being asked to resign. It was a story of how a buzzing office became a cemetery and how hopes lay still inside defunct computer terminals.
A global slowdown surely has its local impact. Themes like IOT with billions of connected devices, artificial intelligence, 5G Infrastructure will pale in front of the political and economic pressures that kept the great leaders of the world away from DAVOS. For a change WEF will have less leaders discussing more complex issues of the world that are not just global but local too. Will the discourses really be able to shape the global, regional and industry agendas especially given the context of uncertainty, fragility and controversy the world is currently experiencing?