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Home BUSINESSGlobal economic headwinds in spotlight at Davos
Sun, 25 Jan, 2015 02:51:00 AM
FTimes-Xinhua Report, Jan 25

The annual meeting of the 45th World Economic Forum on Saturday came to an end and world leaders are still scrambling to find ways to stimulate economic growth.

     Discussions at the forum here during the last few days suggested that the global economy is facing strong headwinds of unemployment, geopolitical risk, low investment and slow progression of structural reforms.

     According to the result of a survey released by PricewaterhouseCoopers (PwC) on Tuesday, the Chief Executive Officers around the world are less confident about global economic prospects than a year ago. Its result showed that only 37 percent of the 1,322 CEOs involved in the survey think the outlook will improve over the next 12 months, compared with 44 percent last year. And 17 percent think the outlook will worsen, more than twice as many as last year.

     The International Monetary Fund (IMF) lowered its forecast for the global economic growth in 2015 just one day before the forum kicked off. Global growth is forecast to rise moderately in 2015-2016, from 3.3 percent in 2014 to 3.5 percent in 2015 and 3.7 percent in 2016, revised down by 0.3 percent for both years relative to the October 2014 World Economic Outlook, said an IMF report.

     It identified lingering legacies of the crisis and weak investment as "persistent negative forces," which will offset positive factors including lower oil prices and depreciation of euro and yen.

     Carmine Di Sibio, Chief Operation officer of Ernst & Young Global, told Xinhua that he took note of "more negativity" about the global economy at the forum.

     He considered high youth unemployment in some countries as one of the main risks that should be dealt with. "We feel that that's a risk all over the world."

     Geopolitical risks can pose another threat for the global economy, according to Carmine.

     At a panel discussion at the forum, Zhu Min, Deputy Managing Director of IMF, argued that the weak investment will hinder the economic recovery in the euro area.

     The European Central Bank (ECB) announced an expanded asset-purchase program, or quantitative easing (QE) on Thursday. The program is expected to inject massive liquidity into the economy of the euro area. The program is aimed at bringing the inflation up to the target of the ECB, which set at just below 2 percent.

     Analysts have expressed their optimism that the QE program, which drove the exchange rate of euro to U.S. dollar down, will probably help the euro area economy to recover.

     However, Axel A. Weber, Chairman of the Board of Directors of UBS, slammed the euro area governments for not conducting necessary structural reforms, which he thought were the remedy for the problems in the euro area.

     Over 2,500 participants from more than 140 countries and regions representing business, government, international organizations, academia, civil society and the media attended the four-day Davos meeting featuring 280 sessions and workshops. 

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