1705828342
The World Economic Forum’s final panel brought together speakers from literally every corner of the world. And despite the famous division of opinion among economists, they largely agreed on the challenges the economy will have to overcome this year.
Tax reform
First and foremost was tax reform, which is necessary in practically every country in the world, but implementation is anything but easy. As the founder of one of the largest investment groups in the world, the American Carlyle, David Rubenstein, emphasized, his home country is no exception.
“Tax reform is very difficult to implement in the United States. Our debt is now $34 trillion. “Interest rates alone are almost at the level of annual defense spending, and if we don’t address this soon, something will happen to the dollar,” Rubenstein said.
Singapore President Tharman Shanmugaratnam said it was necessary to increase government revenue, which was of course politically very sensitive.
“We neglect it because it is not at all pleasant to talk about increasing revenues, that is, increasing taxes.” It is not pleasant to talk about how to redirect subsidies or where to direct spending, so we do “Just go with it,” he said.
Going Green (Economy)
A large part of the debate was taken up by the topic of decarbonization, i.e. the question of how the traditional economic model can be transferred to a new phase in which, on the one hand, the economy will be as dependent as possible on fossil fuels, but on the other hand also the question of how to do that Transferring the traditional economic model into a new phase can at the same time meet the needs of the population. This can be particularly a problem for less developed countries where people struggle with a lack of electricity.
“I would like to point out that as we debate in a heated conference room, there are 600 million people in Africa who do not have electricity. To say to these people, ‘Why are you looking for bread and eating a cake?’ is hypocritical in my opinion,” said Saudi Arabia’s Finance Minister Muhamed Al-Jadan.
The solution, according to his German counterpart, could be a global emissions market, which the Organization for Economic Co-operation and Development (OECD) could help prepare, similar to how it helped develop the globally recognized minimum tax model for companies.
However, Christian Lindner recalled that the transformation to a more environmentally friendly economy is far from the only problem facing the global economy. There is also a need to continue the fight against poverty or prepare for the impact of an aging population.
“We have to increase productivity, and that is why I am a supporter of structural reforms in the labor market, in technology we have to reduce bureaucracy and become more competitive,” said Lindner. In his opinion, Germany could serve as a role model, as Berlin has long been struggling with a number of problems, particularly in the energy sector.
Lindner also rejected the description of Germany as the “sick man of Europe”.
“Germany is not a sick man. Germany is a tired man after a short nap. The expectation of lower growth is one such wake-up call. “Now we drink a good coffee, these are these structural reforms, and then we will be doing well economically again,” said Lindner.
Let’s see who comes back
Among the topics discussed, one stood out, albeit narrowly focused on a particular country, but rightly so given its importance. For a long time, the debate centered on what Donald Trump’s return to the White House would mean for the global economy.
Although there is still a lot of time until the US presidential election, which takes place in early November, the experiences of Trump’s first term have prompted debate participants to consider how best to prepare for a possible repeat.
“I think the best defense is offense, done right.” We have to be strong at home, that means having a strong market that is truly united. “Our market is a huge economic area, but it is not completely unified,” said European Central Bank President Christine Lagarde.
Federal Finance Minister Lindner also made similar comments.
“We should prepare for Trump’s possible second term in office by cultivating our own competitiveness and doing our ‘homework.’ This also includes being an (economic) partner that is attractive at first glance,” said Lindner.
#Outlook #Davos #financial #reform #transition #green #economy #Trump