A man enters the Congress Center in Davos on Jan. 20, 2015, on the eve of the World Economic Forum (WEF) annual meeting there. (AFP Photo/Fabrice Coffrini)
WEF in Davos Opens Under Somber Mood
BY :SHOEB KAGDA
JANUARY 21, 2015
Davos. As world leaders, entrepreneurs, chief executive officers and young global shapers gather in Davos for the 45th World Economic Forum Annual Meeting, they will be confronted by the spectacular beauty of the Swiss Alps but also by the pressing problems facing the global community.
The mood in Davos this year is somber, as reflected in the theme “New Global Context.” From the crisis in the Middle East to stagnant economic growth in Europe to rising security concerns in Asia, the world is entering a new phase of uncertainty.
“The meeting is taking place when arguably every citizen in every country is confronted by profound political, economic, social and above all technological transformations,” said Klaus Schwab, executive chairman of the World Economic Forum on Tuesday night. “These transformations collectively are altering long-standing assumptions about our prospects.”
The annual meeting kicked off with PwC’s 18th Annual Global CEO survey. Of the 1,300 chief executives from 77 countries surveyed by PricewaterhouseCoopers, only 37 percent said that global economic growth will improve in 2015, down from 44 percent last year for a survey on 2014 growth. The lowered expectation was due to disruption and a very competitive global environment, according to the report.
Still, 17 percent of chief executives believe global economic growth will decline, a rate that is more than twice that of a year ago. Meanwhile, 44 percent expect economic conditions to remain steady.
“Without question, the global economic recovery continues to be fragile,” said Dennis M. Nally, chairman of PricewaterhouseCoopers International. “In today’s context adaptability is the biggest issue for both CEOs as well as corporations.”
The International Monetary Fund on Tuesday lowered its forecast on global economic growth for 2015, citing weakness in China and lower crude oil prices worldwide that is crimping Russia's economy.
Among the biggest challenges facing chief executives, Nally noted disruptions brought about by rapid technological changes and rising global hotspots.
“Companies must adapt quickly to the changing environment and slower growth will be the new reality,” he said.
Despite the overall declining outlook for the global economy, chief executives remain confident about prospects for their own companies, with 39 percent worldwide noting that they “are very confident” their company’s revenue will grow over the next 12 months.
Chief executives in the Asia-Pacific region were the most confident on revenue growth, with 45 percent saying they are very confident. The Middle East, despite the security threats, is still one of the most optimistic regions with 44 percent of chief executives very confident of revenue growth.
By country, India tops the list with 62 percent of Indian chief executives very confident of their short-term growth prospects. Other leading countries include Mexico (50 percent), the US (46 percent) and Australia (43 percent).
Russia, which was among the top countries last year as being very confident, was at the bottom of the list in 2015 with only 16 percent of chief executives very confident of revenue growth, down from 53 percent in 2014. The ruble’s collapse against the dollar amid declining crude oil prices is making imports more expensive.
For the first time in five years, chief executives ranked the US as their most important market for growth over the next 12 months, placing it ahead of China. Overall 38 percent of chief executives said the US is among the top three overseas growth markets, compared with 34 percent for China, 19 percent for Germany, 11 percent for the UK and 10 percent for Brazil.