WEF Davos 2012 evaluates global risk factors
By: TODAY (Singapore)
Published January 21, 2012
GENEVA – Economic growth, jobs and protectionism are the top three worries at the start of 2012, according to a “Call to Action” published on Friday by 11 leaders of international organisations in a bid to kick-start debate at next week’s forum in Davos.
The signatories, including the heads of the International Monetary Fund (IMF), the World Bank and the World Trade Organization (WTO), comprise the “Global Issues Group” of the World Economic Forum, the Geneva-based group that runs the annual networking shindig in the Swiss ski resort of Davos.
“Our shared objective is the strengthening of growth, employment and the quality of life in every part of the world,” said the statement. “But entering 2012, we worry about: Decelerating global growth and rising uncertainty; high unemployment, especially youth unemployment, with all its negative economic and social consequences; potential resort to inward-looking protectionist policies.
“While the global economy faces severe challenges, it can regain momentum by supporting the economic transformation underway in the emerging world by meeting the infrastructure needs around the globe and by beginning to realise the promise of a greener economy,” they said.
They called for a “more comprehensive action plan” that could be agreed upon at the G-20 summit in Mexico in June and said countries could rebuild confidence by implementing proposed reforms and by increasing global cooperation.
The three-page list of issues and proposed solutions, which the group said did not necessarily reflect the views of their organisations, is unlikely to stir much controversy.
Their five-point plan for reigniting growth included restoring confidence in financial institutions, cutting deficits without cutting growth, addressing youth and long-term unemployment and using public-private partnerships to help countries finance investments without adding to deficits.
Reflecting the IMF’s concern about over-aggressive deficit reduction programmes, the joint statement said governments should “manage fiscal consolidation to promote rather than reduce prospects for growth and employment. It should be applied in a socially responsible manner.”
In the short term, the 11 leaders said the two most important challenges were to solve the sovereign debt and banking crisis and to restart growth. They urged the implementation of new, tougher regulations for finance and the rapid recapitalisation of banks where necessary.
On the tricky issue of resolving the euro-zone crisis, they recommended “continuing the European Central Bank’s measures to secure bank funding and liquidity, enhancing the European Financial Stability Facility and European Stability Mechanism to ensure governments can fund at sustainable rates and implementing country-level fiscal packages to stabilise debt dynamics”.
In the longer term, the 11 signatories said the world would need new sources of growth, financial sector reforms, open markets, low-carbon growth and efforts to create jobs and support the poor.
They also urged governments to resist the temptation to resort to trade barriers in an attempt to safeguard jobs. “Countries must reaffirm that none will resort to growth-destroying protectionism and demonstrate that trade restrictions introduced in response to the economic crisis will be rolled back.”
The signatories were Ms Christine Lagarde of the IMF, Mr Robert Zoellick of the World Bank, Mr Pascal Lamy of the WTO, Mr Mark Carney of the Financial Stability Board, Ms Margaret Chan of the World Health Organization, Mr Angel Gurria of the Organisation for Economic Co-operation and Development, Mr Donald Kaberuka of the African Development Bank, Mr Haruhiko Kuroda of the Asian Development Bank, Mr Luis Alberto Moreno of the Inter-American Development Bank, Ms Josette Sheeran of the United Nations World Food Programme, and Mr Juan Somavia of the International Labour Organization.
The 2012 Global Risk Report can be accessed at http://www.weforum.org/reports/global-risks-2012-seventh-edition.