From left: ECB member of the board Benoit Coeure, Bank of England governor Mark Carney, and IMF deputy managing director Min Zhu participate in a panel session at the World Economic Forum. (EPA Photo/Laurent Gillieron)
WEF's Finishes 45th Annual Meeting With Upbeat Outlook
BY :SHOEB KAGDA
JANUARY 26, 2015
Davos. Falling oil prices and the economic package announced by the European Central Bank were the central topics of discussion among the global business leaders participating at the 45th annual meeting of the World Economic Forum.
As the curtains came down on the annual meeting of the world’s business and political elite, there were the usual calls to reduce inequality and ensure that the poorest also feel the impact of global growth. Structural reforms in China, Brazil and other emerging economies also received center stage and for the first time, gender parity was high on the agenda.
Despite more pessimism at the meeting this year as compared to last year, central bankers and economic leaders remained upbeat about economic prospects for the year ahead. With the International Monetary Fund forecasting 3.5 percent growth this year, panelists at a session on global economic outlook pointed to the upside potential of the ECB stimulus package, falling oil prices, structural change in emerging economies and the robust growth in the United States.
“To reduce inequality, the best answer is growth,” said Roberto Egydio Setubal, chief executive and vice chairman of the board at Itau Unibanco in Brazil.
Setubal, who was also the co-chair of the WEF annual meeting 2015, said the world had had a tough few years, but “now we are more optimistic because the US economy is coming back and we will see better results in the next five years than we saw in the last five.”
Another bright spot on the global economic landscape is the Southeast Asian region, which comprises the 10 member countries of the Association of Southeast Asian Nations.
Political and business leaders from the region were confident that the Asean Economic Community, which comes into effect in December 2015, will create greater opportunities and boost growth.
The AEC will create a common market of 600 million people and incorporate some of the fastest growing economies in the world, including Indonesia.
In a special session on the Asean agenda on Friday, business leaders called for regulatory harmonization to accompany economic integration.
“Some in the audience many not believe it, but believe me, we will have a single market by the end of the year, said Pridiyathorn Devakula, deputy prime minister of Thailand. He added that tariff reductions within the community have already been largely accomplished but work remains on cutting non-tariff barriers.
James T. Riady, chief executive of Lippo Group, said that unlike northern Asia, with its emphasis on heavy industry that works closely with government, most of Asean’s economies depend on entrepreneurship, light industry and services.
As such the AEC will particularly benefit the services sector, which gains competitiveness with scale.
“If the Asean Economic Community can become a reality this year, we are at the beginning of something quite fantastic,” he said, adding that in order to ensure that the AEC is smoothly implemented, the Asean Secretariat will need to be strengthened and led by a dynamic and entrepreneurial leader so as to prevent too much bureaucracy from seeping in.
This view was echoed by Anthony F. Fernandes, group chief executive of AirAsia.
“Asean is growing faster than China or India but it must be seen by outside investors as a single market,” he said, adding that the 10 countries still have regulatory systems and bureaucracies that make it difficult for private companies to operate.
Government leaders must thus make easier for companies and investors to operate in all 10 countries simultaneously.
“Not everything will be done by December, but a lot will be fixed and it will be a fantastic platform,” Fernandes predicted.
Malaysia, which assumes the Asean chairmanship this year will play a leading role in moving the region towards a common market. Abdul Wahid Omar, Minister for Economic Planning Unit, noted that the region has grown at an average of 6 percent a year for decades.
“We now want to make sure that the economic prosperity we achieve is translated into higher personal income for the people,” he said.
Integration of rules and regulations and the creation of an Asean identity — perhaps though a common time zone — are logical steps towards a common market.
It was perhaps fitting that the 2015 WEF concluded with a focus on achieving gender parity, given that half the world’s population is made up of women. While much has been achieved, panelists on a session on the topic noted that much more work needs to be done. Education and technology, particularly the Internet, cut across every aspect of women empowerment.
Melinda Gates, co-chair of the Bill & Melinda Gates Foundation said women played a central role in society, especially in developing countries.
“If you invest in a girl or woman, you are investing in everybody else,” she noted. “If we don’t do this, we don’t unlock the potential for what you can do for a family, society and a country.”
Technology, in particular the mobile phone, has transformed the lives of women around the world.
“The cellphone is one of those innovations that will unlock everything and change things for people al over the world,” she said.