and if 2023 goes well for growth

For this 53rd edition of the World Economic Forum in Davos, the first winter session since the 2020 Covid crisis, there is a contrast between the collective pessimism of leaders about growth and the relative optimism displayed by those we met. conference days.

“The Davos Forum is a very good observer of past and present trends, but a particularly poor predictor of the future. In general, the next year is better when the participants are worried and vice versa, especially in odd years,” emphasizes the active member of the World Economic Forum.

The theme of the year emphasizes the need for better “cooperation in a fragmented world” and illustrates well the sense that the world economy is in a delicate transition. A succession of crises, from the health care crisis to the energy price shock, is testing nerves and creating levels of stress and uncertainty not seen since at least fiscal year 2008. States like Inflation Reduction Act The organizers of Davos, led by its founder Klaus Schwab, urge Joe Biden (IRA) not to forget that globalization and free trade remain the most effective means of creating non-inflationary growth.

Fragmented globalization: this scenario that could turn the world upside down

Among the 2,700 people visiting the famous Swiss resort of Grisons are 40 heads of state and government, but only one member of the G7, Olaf Scholz. In the absence of Emmanuel Macron, the French delegation kept a low profile with a few regulars including Patrick Pouyanné (TotalEnergies), Benoit Potier (Air Liquide), Jean-Pascal Tricoire (Schneider Electric), Sabrina Soussan (Suez). ), that is, most of the executives from the energy sector and what is called “clean technology” here, are the champions of the energy transition. The launch of ChatGPT was followed by several French ministers, such as Jean-Noel Barrot and Bruno Le Maire, responsible for Digital, who took part in a panel on the new global darling, artificial intelligence. At the French-Spanish summit, the duo with the head of state, Christine Lagarde, is due to participate in the final panel on the world economic outlook this Friday.

Despite the number of participants, it is less than the last edition in January 2020 due to the weak participation of China and the disappearance of delegations from Russia, Iran and Turkey, which were replaced by Ukraine and the Gulf countries. the gas and oil race, Davos 2023 looks a little tired, the world after Covid and the war started by Russia looks so unsolved that it no longer resembles the myth of happy globalization that the World Economic Forum has caricatured for the past decade.

Recession or not, de-globalization or re-globalization in the form of “Near Shoring” or “Friendly Shoring”, sustainability and public assistance, the words of this 53rd edition paint a whole picture we are used to.

Europe in particular emerged as a bulwark against the American IRA and Chinese subsidies to its green industry. This race for green investment raises fears of protectionism. In her opening remarks, European Commission President Ursula von der Leyen denounced “aggressive attempts” and “unfair practices” aimed at attracting industrial potential to China and elsewhere with subsidies, particularly related to clean energy. . To warn that the EU will not hesitate to open investigations if it believes that foreign subsidies are distorting the market. He accused Beijing of openly encouraging energy-intensive companies to “relocate all or part of their production to its territory” while also “massively subsidizing its industry and restricting market access for ‘EU’ companies. And Europe is a bit schizophrenic because, at the same time, Europeans worried about US President Joe Biden’s flagship climate investment plan, the famous IRA, which provides huge aid to companies set up in the electric car or renewable energy sectors in the US, are now trying to get out of the American plan, their companies or To reduce the risk of European industries suffering from this.

At the end of the week, the participants were smiling again. A wind of optimism blew in Davos, especially after ECB President Christine Lagarde’s statements about the European economy. European Central Bank (ECB) President Christine Lagarde said on Thursday that economic activity in the euro zone has slowed compared to 2022, but this year will be “better” than initially feared, despite inflation and the energy crisis. The official said at the Davos Economic Forum that the news has been more positive in recent weeks, so the current year “will not be brilliant, but it will be better than feared.”

Labor markets in Europe, in particular, have never been more dynamic, with jobless numbers at “20-year lows”. Likewise, Germany, Europe’s largest economy, should avoid recession in 2023 despite a still tense situation facing an energy crisis, according to Chancellor Olaf Scholz in an interview with Bloomberg on Tuesday from Davos.

However, Christine Lagarde dashed bull market hopes by reaffirming her determination to tackle inflation, which remains “very high” even if price increases have slowed since a peak of more than 10% in October.

“Our determination at the Central Bank is to take all measures to achieve this (inflation return to the 2% target) on time,” he stressed.

The ECB increased interest rates by 0.5 percentage points in December. But many central bankers around the table initially wanted to raise them by 0.75 points, which they see as the only signal consistent with a deterioration in the inflation outlook. Cumulatively, rates have been raised by 2.5 percentage points since July, an unprecedented pace. The next meeting is scheduled for early February.

Another element that could make investors smile again is China’s reopening, which was confirmed in Davos by Vice Premier Liu He, who also gave signs of comfort with the US on the trade war between the two countries during a meeting in Zurich. US Treasury Secretary Janet Yellen on the outskirts of Davos. And finally, if 2023 presents itself under better circumstances than the economic world feared this summer and this fall. It’s still a little early to judge, but not to hope.