At the traditional World Economic Forum (WEF) held from 21 to 24 January in the Swiss ski resort of Davos, climate change and mitigation measures received the most attention. But the approximately 3,000 high-ranking representatives from business, politics and science also discussed other pressing issues such as trade conflicts and a fairer tax system. At the beginning of the meeting, the International Monetary Fund (IMF) presented its new global economy forecasts.
IMF expects a return to more growth
According to the IMF, global growth will be picking up slightly in 2020. According to the IMF experts, the global economy is expected to grow by 3.3 per cent this year compared with 2.9 per cent in 2019. However, expectations have been slightly lowered compared to the forecast made in October 2019, at which point the IMF was expecting 3.4 percent growth for 2020. For 2021, the IMF revised its forecast to 3.4 percent from initially 3.6 percent. The slightly lowered estimates are mainly due to the weaker development in India, a major emerging market that, however, is currently suffering from severe political unrest. Meanwhile, new tensions regarding trading between the USA and the European Union also pose a risk for IMF chief economist Gita Gopinath.
Climate change topics beyond Greta vs. Trump
Against this backdrop, EU Commission President Ursula von der Leyen said in Davos that the EU Commission would not shy away from tariffs and other import barriers if international trading partners’ production methods remained less environmentally friendly than European companies.
In addition, managers of large financial groups used the WEF to emphasize the economic importance of climate-friendly business models. Bank of America CEO Brian Moynihan, for example, advocated “sustainable business models that address long-term social goals”. Investment management company Blackrock announced plans to give priority to green investments: “We must note that climate risks are also investment risks,” said Vice Chairman Philipp Hildebrand. Investment advisors from Mercer already reported “pressure” to offer sustainable investments. The head of Europe’s largest insurance group, Allianz, in turn called for a discussion about appropriate measures to phase out coal. Overall, the impression felt was that corporations are trying to see a silver lining in the necessary cuts: “Sustainability is one of our greatest business opportunities, because it’s about how to operate the physical world in a way that maintains value in the long term,” Accenture Germany CEO Frank Riemensperger summarized the sentiments.
OECD hoping for tax reforms before 2020
Apart from climate issues, the need to improve the global tax system was also a major topic of discussion. The Organisation for Economic Cooperation and Development (OECD) hopes to agree concrete figures by July at the latest, so that new tax regulations can be implemented in the latter half of the year. Under the umbrella of the OECD, countries are working on a global minimum tax for corporations and a new form of taxation for internet companies.
Legal note:
Prognoses are no reliable indicator for future performance.