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WEF delegates in Davos urge cautious optimism in 2013

Monday, 28 January 2013 - 4:53 AM SL Time

Mon
Jan 28, 2013
Updated: 6:18am

As world recovers from euro crisis, US fiscal cliff and China slowdown, the mood at Davos was upbeat - but it`s no time for complacency

The crisis mood is gone, but that does not mean you can slip back into your old ways. That is the message from top officials wrapping up the World Economic Forum in Davos, Switzerland.

They warned governments on Saturday against letting their relief over an improved economic climate turn into complacency over reforms many wanted to see in order to sustain a still uncertain recovery.

A sense of crisis had hung over the WEF in the two previous years, but the mood was sunnier at the 2013 edition as speaker after speaker said they were now cautiously optimistic.

`I feel the circumstances in which I`m addressing you today are very different than 12 months ago,` said Italian Prime Minister Mario Monti in his opening speech, following a difficult year dominated by the euro crisis.

European Central Bank president Mario Draghi, meanwhile, hailed 2012 as the year that the troubled single currency was `relaunched`, even as others were hailing him as the man who had saved the euro zone from catastrophe.

The Chinese economy`s slowdown seemed less serious than a year ago to the participants, while the step back from the fiscal cliff in the United States also eased minds.

But as the 2,500 world leaders, financial officials, tycoons and journalists departed the Alpine resort, they might have felt a chill that was not just due to the sub-zero temperatures.

International Monetary Fund head Christine Lagarde said the IMF`s forecast of a `very fragile and timid recovery for 2013` was based on `euro zone leaders, the US authorities on the other hand and the Japanese authorities making the right decisions`.

She added: `And that`s what I mean by `do not relax` because some good policy decisions have been made in various parts of the world. In 2013, they have to keep the momentum.`

Echoing Lagarde, Angel Gurria, the secretary general of the Organisation for Economic Co-operation and Development, said: `Let`s fight complacency with everything we`ve got. Let`s continue with the reform process so we can consolidate this hesitant recovery.`

Akira Amari, Japan`s minister of economic and fiscal policy, underlined the determination of the newly elected government of Prime Minister Shinzo Abe to jolt the country`s economy out of its stagnation.

As in previous years, the Davos forum was partly hijacked by external events, particularly after British Prime Minister David Cameron vowed to hold a referendum on European Union membership by the end of 2017.

The move threatened to cause a stir, with Cameron`s European counterparts worried about the effect the uncertainty would have on the euro`s already fragile recovery, but they left any disputes for another day.

The turmoil in the Arab world also took centre stage for a time as officials, including Jordan`s King Abdullah, urged `desperately needed` action over Syria`s civil war, though none came.

Amid the cocktail parties and lavish luncheons this year, there was sometimes a `mood of complacency`, said Axel Weber, chairman of Swiss bank UBS and former head of Germany`s central bank.

`My biggest fear is that 2013 could be a replay of 2012, another lost year,` he said. `We shouldn`t be complacent we haven`t really fundamentally improved that much.`

Many were still worried by the euro. The Deloitte financial group`s global chief executive, Barry Salzberg, said he was `reasonably comfortable, with one exception - and that is what`s the impact on the US from Europe`.

Other officials expressed fears that governments would increasingly lean on central banks, which have often been the heroes of the fragile global recovery in the past two years, instead of taking action themselves.

But in many ways it was business as usual at Davos, with world leaders huddling in private and corporate deals sewn up on the sidelines, such as a US$10 billion shale gas deal between Ukraine and oil giant Royal Dutch Shell.

Even a noisy protest yesterday by three topless women from a Ukrainian feminist group, who also set off pink flares, failed to shock - as they had targeted Davos the previous year, too.

Source(s)
South China Morning Post

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elephanthouse
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LK Information  27 Jan 2013 22:56:02 GMT  Report for Abuse  
First sign of optimism after quite some time!
The mood at the Davos forum was cautiously optimistic, with many delegates saying any recovery was still fragile.
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LK Information  27 Jan 2013 23:02:42 GMT  Report for Abuse  
Japan policy sparks Davos fears of currency war
Agence France-Presse in Davos, Switzerland

Japan s controversial new economic policy emerged as one of the hot topics at this year s Davos forum, with talk of currency wars and strong rebuttals from Japanese officials.

The new government in Tokyo, led by Shinzo Abe, has pushed the Bank of Japan (BOJ) to step up efforts to battle nearly two decades of deflation and sluggish growth in the world s third-largest economy.

The BOJ on Tuesday unveiled a new inflation target of 2 per cent and a massive programme of asset purchases to pump money into the economy, sparking accusations it had bowed to political pressure and compromised central bank independence.

The new government policy has also led to a steady decline in the value of the yen against other currencies boosting exports but other countries have expressed concern that Tokyo is pursuing a beggar-thy-neighbour approach.

No less an authority than German Chancellor Angela Merkel got the ball rolling in Davos when she complained in typically under-stated fashion that she was not without some concern about Japan right now .

She also appeared to warn Tokyo that its actions were not going unnoticed on the world stage, saying there was an increasing awareness of what she called political influences or manipulations of the exchange rate .

This sparked a furious reaction in Tokyo with Finance Minister Taro Aso telling reporters that such accusations were completely off the mark .

In an unusual ministerial comment on foreign exchange rates, French Finance Minister Pierre Moscovici also told a panel at the Swiss ski resort that the level of the euro is high and it creates some problems .

But Japanese officials hit back, arguing that some intervention was required to reverse years of an overly strong yen harming the economy.

Japan s minister in charge of economic and fiscal policy, Akira Amari, travelled to Davos to insist that the BOJ had voluntarily decided to introduce the new target.

He also stressed it was up to the markets to set the appropriate exchange rate.

One leading Japanese businessman complained: The yen appreciated by 40 per cent against the dollar and 50 per cent against the Korean won. How can we compete under such circumstances? Some macro-economic management is key.

Carlos Ghosn, one of the world s richest people and boss of Japanese automaker Nissan, said it was important to eliminate the obstacles that the strength of the yen gives to the economy .

It is an attempt just to bring the level to a normal price, it is good for Nissan, he said.

But an independent arbiter, the head of the Organisation for Economic Co-operation and Development (OECD), said Japan was treading a fine line between defending its currency and putting trading partners at a disadvantage.

The only question is where do you draw the line between what is genuine self-defence and then something that would be a beggar-thy-neighbour policy? This is a thin line and it s a difficult line to walk, said Angel Gurria.

While fears that such a powerful country as Japan was intervening to control its exchange rate exercised the minds of some Davos participants, others warned it was an overblown fear.

Mark Carney, the governor of the Bank of Canada, stressed that the group of seven top industrial countries had vowed to refrain from interfering in exchange rate policy for the benefit of the global economy .

Jin Liqun, chairman of the China Investment, told a Davos panel: Don t believe this myth about a currency war. I think there would be no winners in a currency war.

But another analyst, Nariman Behravesh, chief economist of think-tank IHS, said such policies could lead to what he termed an epidemic of competitive devaluations with potentially devastating consequences.

This is a dangerous scenario, which was played out at a huge cost to the global economy in the 1930s, judged Behravesh.
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LK Information  27 Jan 2013 23:06:03 GMT  Report for Abuse  
China economist at Davos predicts growth after soft landing
Associated Press in Davos, Switzerland
China s economy is now recovering from a soft landing , but the big challenge this year will be to prevent overheating while still promoting growth, the head of China s National Economic Research Institute said on Wednesday.

Fan Gang told a session on China s growth prospects at the World Economic Forum in this Swiss Alpine resort that the world s second-largest economy should grow faster this year than it did last year.

China posted growth of 7.8 per cent last year, its weakest performance since the 1990s, but its economy started reviving at the end of the year when growth rose to 7.9 per cent, up from the two previous quarters.

Now I can say the soft landing has landed last year, and now it s under way to recovery, said Fan, whose institute is part of the Chinese government.

Now I can say the soft landing has landed last year, and now it s under way to recovery

The recovery would coincide with China s new leadership. Vice-President Xi Jinping, who was chosen in November to succeed President Hu Jintao as party leader, will take over the presidency in the spring.

Fan said growth could be supported by local governors plans for infrastructure spending and new housing construction spurred by migration from rural areas to cities.

The challenge will be, he said, to see how the central government and the banking system can work together to maintain growth while not allowing the added government spending to promote further heavy borrowing and overheating of investments.

If that happens, Fan said, I do believe that this year China can grow around 8 to 8.5 per cent, and that will lay down a good foundation for the next couple of years .

Fan said 2013 could also be the year to start the new round of financial, economic, regulatory and social reforms that the Chinese are all expecting.

The new leadership is now talking about reform and reform and reform, and restructuring, restructuring and restructuring, he said.

The leaders are calling for recommendations, Fan said.

He said all kinds of people not only the reformers but also people that want to go back to the planned economy, people that want to go back to the government social welfare are submitting ideas.

But, Fan said, we expect the new leadership will mainly keep the direction of reform, in a market-oriented direction .

Hopefully, he said, this will lead to a new round of reform that keeps growth going in the next five to 10 years.

Fan said new policies and reforms might be announced at a meeting of the People s Congress in the fall.

He said key reforms needed are in the central government s relationship with local governments and the markets, the monopoly of state companies and how to promote fair competition, and on social security issues including income distribution and redistribution, and taxation.

Wang Boming, editor in chief of Caijing. Photo: AP
1
Wang Boming, editor in chief of the Caijing financial magazine, said the economy did bounce back in the fourth quarter last year but people are asking, is that sustainable?

He said what was really surprising about last year s growth of 7.8 per cent was that for the first time, more than half of the growth came from consumption, not exports and investment which have driven China s economy for the past 10 to 20 years.

Wang cited two key reasons for the upsurge in consumer spending a 100 per cent increase in online shopping last year and an increase in the income of people in rural areas, partly due to high grain prices. He said there was also a little bit of new financial reform and regulation.

At another session looking ahead to China in 2020, Li Jingtian, senior vice-president at the Central Party School of the Communist Party of China, stressed the government s commitment to reform. He also said he was very confident of maintaining economic growth, though there will be difficulties because of the international economic environment and determining how to drive internal consumption.

Ma Weihua, president and chief executive of China Merchants Bank, said consumption holds the greatest potential because it is still low in China 35 per cent compared with 70 per cent in the United States. But he said if the government wants to increase spending it needs to address social security issues and income disparities.

Xu Xiaonian, professor of economics and finance at China Europe International Business School, said there was too much financial regulation and a clear bias toward state-owned companies.

The key question is whether the government has political will to reform and not just talk about it, he said.

We have to give freedom to the press and media, Xu said, adding that that is the only way to know whether the party is serious about reforms.

Otherwise, it s just lip service, he said.
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LK Information  27 Jan 2013 23:16:17 GMT  Report for Abuse  
Source: Indian Express

WEF: Leaders warn against complacency, call for job creation

PTI Posted online: Sun Jan 27 2013, 16:33 hrs

Davos : The global economy may be in a better shape after its worst-ever crisis but it is no time to relax, and governments as well as business leaders must persist with job creation, income and gender diversification as also to meet aspirations of the youth to keep up the growth momentum.
This is the message from over 1,600 business leaders, around 50 government heads and over a 1,000 leaders from other walks of life, who had congregated at this Swiss Alpine ski resort for the annual meeting of the World Economic Forum.

The meeting, which began on January 22 and ended today, saw countries like Russia, Indonesia, South Africa and Malaysia making a strong pitch for attracting investments worth trillions of dollars, while China emerged as a major growth story.

On the other hand, India which had a strong presence at the event with more than 150 business leaders, four union ministers and many others, saw issues related to corruption and policy logjam being mentioned on quite a few occasions.

Indian leaders asserted, however, that the country was moving ahead with its reform agenda, has a strong growth potential and the issue of corruption was a worldwide phenomenon and no country should be singled out for that.

As the five-day meeting came to an end with a mountain soiree continuing till early this morning, world's top economic leaders said it is no time to relax and much more work is still left to be done by governments and corporates in different countries to keep the growth momentum and revive the economy.

The International Monetary Fund chief Christine Lagarde asked the countries across the globe and their leaders to follow a 'do not relax' principle and not let any complacency to come into their efforts.

'I will pursue with 'do not relax' principle. The forecast is for a very fragile recovery in 2013 and that is why I will emphasise on do not relax,' Lagarde said.

She also termed the recovery as 'fragile and timid'.

Swiss banking giant UBS Chairman Axel Weber said he fears that 2013 could be a repeat of 2012, as the last year had also begun well but things started deteriorating later.

'In my view the mood at Davos borders on complacency. The mood has been good, in brackets too good to be true,' he warned.

Reflecting similar sentiment, Secretary General of Paris- based OECD, a grouping of mostly rich nations, Angel Gurria said that it is wrong to feel relieved just because the crisis has been overcome.

'What are we relieved about? Are we relieved about exhausting our monetary measures and all other measures. In fact, we should be worried about the current scenario when we have exhausted all our tools. There are issues concerning education, jobs, women, infrastructure building etc, which need to be tackled,' he said.

Touching upon the issues of poverty and unemployment, the World Bank Chief Jim Yong Kim said efforts should be made to end poverty, besides making sure that prosperity is shared with women as well as the future generations.

With sliding growth in most of the developed nations, employment opportunities are difficult to come by. Going by the International Labour Organisation (ILO), more than 75 million youth worldwide are looking for work.

Kim also said emerging nations are playing a major role in maintaining overall growth. 'Rich countries should thank the developing nations for maintaining the growth that we have seen in the last five years,' he noted.

The leaders also said that the UK's position vis-a-vis EU would be needed to be looked out for, especially after British Prime Minister David Cameron's strong assertions about seeking a vote on the issue, and leaders from other parts of Europe saying that EU did not want unwilling members.

Cameron, incidentally, also promised his commitment to seek greater trade ties with India, while replying to a question from UK-based billionaire NRI industrialist G P Hinduja during an interactive session.

Besides, there were discussions about Arab uprisings, with leaders from the region asserting that progress on women's rights and fight against corruption can't happen overnight.

At the WEF, the Bollywood night as well as the most-sought after Google party were missing this year. Also, many corporate parties took the form of semi-official breakfast, lunch or dinner sessions, rather than their earlier avatar of cocktail events.
AnuD
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LK Information  28 Jan 2013 00:53:14 GMT  Report for Abuse  
The BOJ on Tuesday unveiled a new inflation target of 2 per cent and a massive programme of asset purchases to pump money into the economy, sparking accusations it had bowed to political pressure and compromised central bank independence.


This is what US was doing.

US printed more money and bought bad debt from insolvent companies such as Lehman.. and GM. Now, they are making money and are buying back those cheap stock from the govt.

impartial
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LK Information  28 Jan 2013 01:06:23 GMT  Report for Abuse  
Nice hear that world econmy improving..
optimisms is the key word here.. cautious optimism :) i think optimism it self resolve many of the problem if inverters star investing again following a risky approach, currently money kept on bonds,banks with out investing due to uncertainty

Edited By - impartial - 28 Jan 2013 01:09:38 GMT
AnuD
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LK Information  28 Jan 2013 01:17:18 GMT  Report for Abuse  
currently money kept on bonds,banks with out investing due to uncertainty



Earnings from the western stock market is only history. Don't expect that again.
impartial
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LK Information  28 Jan 2013 01:27:45 GMT  Report for Abuse  
Earnings from the western stock market is only history. Don't expect that again.

i don't think its history.. it can grow we have gone through this kind of recessions through out our history the moment we got out of that we have few years of a good run.

BTW it has nothing to do with only investing in stocks .. there is a huge space to invest in renewable energy,recycling,waste management etc


Edited By - impartial - 28 Jan 2013 01:33:08 GMT
elephanthouse
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LK Information  28 Jan 2013 07:36:58 GMT  Report for Abuse  
AnuD
Oncle Sam always knew how to take advantage of the fact that the Dollar is the world s reference currency, be it in terms of exchange rate differential, interest rate or other mechanism. This does not prevent him to blame the Chinese from undervaluing its own currency.

Impa
You are right. It is an important factor. At the same time we should not forget the lesson learned by the latest crisis. The major disconnect between the real economy and what we could call the casino economy also needs to be addressed.
You have mentioned very good examples of areas to invest.
Roshan2007
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LK Information  28 Jan 2013 08:08:03 GMT  Report for Abuse  
As world recovers from euro crisis, US fiscal cliff and China slowdown, the mood at Davos was upbeat - but it's no time for complacency

The crisis mood is gone, but that does not mean you can slip back into your old ways. That is the message from top officials wrapping up the World Economic Forum in Davos, Switzerland.


good to see positive news.

I believe 2013 will belong China and S Korea.
rest of the world would be struggling to get back on foot.
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