Navigating Global Economic Resilience, Embracing The New Normal, And Assessing Future Risks At Davos

"The largest challenge to resilience is not to think about it on a year-to-year basis", stated Tharman Shanmugaratnam, the President of Singapore who was one of the panel speakers at the World Economic Forum (WEF) in Davos, Switzerland on Friday.

Speaking about the global economy if it is as resilient as we think, Shanmugaratnam said, "We know what's happening in the global a shift of ecological balance, ageing of societies, which we are not prepared for. The gradual rift towards polarisation, these are the real threats to resilience and human security."

Discussing the normalisation in 2023 which can bring hopes for the future, Christine Lagarde the President of the European Central Bank said, "The period before 2023 was strange, extraordinary to analyse on various accounts. We started seeing the beginning of normalisation. Some of the industries that we use to identify the relationship, particularly between vacancies and unemployment are changing. Thus, indicating less tightness on the job market."

Furthermore, Debating about how savings around the world are declining, Lagarde said, "We used to have excess savings, especially in the advanced economies which are now coming down. From 10% savings, we are eventually getting down to 0%. Implying that consumption is not as strong a force as it used to be."

"Trade went down and got massively disrupted by goods vs services throughout the last two years, however, it is now beginning to pick up. Global trade numbers for the first time in months were up. Around the world inflation is also coming down," she concluded.

We have been optimistic in 2024, and are forecasting a recovery of 3.3%. However, trade growth is still trending below GDP growth. The geo-politics conflicts, problems in the Suez Canal, and the Red Sea may come across uncertainties. 

"Global economy has shown remarkable resilience", stated Christian Lindner, the Party leader of the Free Democratic Party in Germany discussed the energy situation in Germany. "We had to reinvent the energy structure and supply last year. Looking towards the future, we are witnessing a new normal and 2023 marks it as the new-normal year."

Mentioning the race of Artificial intelligence, geopolitical tensions, and higher mortality rate, Linder raises questions on how we will be able to finance transition by the private capital markets, and how to fight poverty. 

"It is the new normal that we have to be prepared for, 2023 was a call for action. As we have to rearrange policies and perhaps an era of structuring new reforms."

Meanwhile, the Minister of Finance of Saudi Arabia, Mohammed Al-Jadaan said, "There are immediate risks such as geopolitics, fragmentation which adds to inflation and monetary tightening which requires immediate attention."

"The projects stated by the World Bank or IMF suggest this decade will be the lowest growth potentially for the global economy as compared to the previous decades. "