2024-01-20T07:49:30+00:00
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/ The world is witnessing a state of economic instability amid more moderate conditions dominated by a group of geopolitical risks, according to what was revealed by the final session of the Davos Economic Forum in its latest edition.
As the World Economic Forum wrapped up, European Central Bank President Christine Lagarde and her peers agreed that the prospect of falling inflation and a recovery in global trade was somewhat encouraging for investors despite the war and populist approach.
The six-member panel was tasked with summarizing the mood at Davos after a week of discussions, with participants leaning toward a hawkish global outlook, highlighting the likelihood that a severe recession will likely be avoided despite unprecedented monetary policy tightening to control inflation.
Geopolitical concerns have at times undermined that optimism, with wars looming in Ukraine and the Middle East, and tensions in the Red Sea crisis as well. Many in attendance also greeted with concern Donald Trump’s victory in Iowa on Monday, which put him on the path to the Republican presidential nomination.
“There is a lot of uncertainty, of course, about all the elections that we see around the world and what they might come out of,” said WTO Director-General Ngozi Okonjo-Iweala.
Okonjo agreed with Lagarde’s view that the world “may be moving towards a return to normalcy,” but that process is, at the same time, “certainly not normality as we knew it.”
The possibility of a second Trump presidency was repeatedly invoked during a panel discussion moderated by Bloomberg Television’s Francine Lacqua. Lagarde took an optimistic stance, saying “the best defense is offense,” and urged pressure to strengthen Europe by creating a “true single market,” while German Finance Minister Christian Lindner was more cautious.
Financial conditions in the United States were among the concerns frequently voiced during the week of events, perhaps alluded to by Singapore’s President Tharman Shanmugaratnam when he said that “the most important and most neglected area of public economic policy is fiscal reform.”
Earlier in the week, Deutsche Bank CFO James von Moltke described the situation as an “awesome” moment for him because of his amazement at the resilience of economies and financial markets, while Harvard professor Ken Rogoff worried that “the geopolitical situation is unlike anything I have seen in my career.”