Davos in Ukraine and the recession

This time the appointment of the strong was given in May and not in January in Davos, Switzerland. Let’s look at the pandemic. The snow has melted and the “brittle” (raw) architecture of the 70’s probably disappoints those who used to enjoy the alpine panorama. Otherwise, however, the “Davos myth” remains strong. Businessmen and political leaders from all over the world talk without a formal agenda, exchange ideas, envision the future. The Prime Minister of Greece Kyriakos Mitsotakis is also present this year, who will speak at an official dinner on Tuesday night. Shortly before, the President of Northern Macedonia, Stevo Pentarovski, will participate in a panel on security in Europe.

In a message to the World Economic Forum via teleconference, Ukrainian President Volodymyr Zelensky called for tougher sanctions on Russia and more aid to his country. At the same time, he clarified his position for the “next day”, saying that he does not accept to negotiate, except with Russian President Vladimir Putin. “After everything they have done, you understand that there is not much desire to negotiate,” says Zelensky. “Nor is there any desire for meetings with intermediaries. I can not accept a meeting with anyone other than the Russian Federation except the president. And that only to discuss the end of the war.”

Russian officials and businessmen have not been invited this year. The “House of Russia”, an imposing 1879 villa in which, according to the German Radio (DLF) envoy, once held the most frantic parties in Davos, would be left empty. But Ukrainian billionaire Viktor Pinchuk had the idea for an “aggressive takeover”, as the Swiss Neue Zurcher Zeitung (NZZ) calls it. He decided to rent the “House of Russia” himself for the days of the Forum and turn it into a “House for the war crimes of Russia”, organizing an exhibition with rich photographic material from the Russian invasion of Ukraine.

Where will the recession occur?

With the pandemic in the economy and labor market still fresh, the war in Ukraine is exacerbating the risk of a global recession and fueling inflationary pressures on food and energy. On Monday, the head of the International Monetary Fund (IMF) Kristalina Georgieva was asked to answer the question that concerns everyone: Is the world economy in danger of recession? “My answer is no, for now,” she said. “I can not rule it out, after all in April we had on hand revised economic forecasts for 143 countries that represent 86% of the international economy. But let us remain in the numbers. Today our forecast is + 3.6%. From +3 “6% until the global recession we have a long way to go. We are more likely to see a recession in certain countries.”

Another torturous question is whether the European Central Bank (ECB) will deliver on its promise to raise interest rates for the first time in eleven years, ending the negative interest rate policy. Speaking on Tuesday from Davos to the Bloomberg financial network, ECB chief Christine Lagarde said that “by the end of September, interest rates will probably be at zero or even slightly above”. However, she does not expect a recession in the eurozone and justifies this forecast with low unemployment levels, but also high savings rates.

Anxiety about Africa

The economic problems of the richest industrialized countries overshadow the debate over the enormous problems facing African countries, to which is now added the risk of a wider food crisis due to the war in Ukraine. The Dutch newspaper De Volkskrant recalls that in East Africa a child dies of starvation every 48 seconds, as the region has been hit in recent years by an unprecedented drought, the effects of which only grain exports from Russia and Ukraine could somewhat mitigate. . International NGOs estimate that at least $ 46 billion is needed today to launch the necessary food aid, but so far only… six billion has been raised.

“Under the radar” of the industrialized countries, Russia, China, but also India are strengthening their presence, but also their influence, in the countries of Africa. The phenomenon, which has been pointed out in his books by the founder of the World Economic Forum, Klaus Swab, is confirmed daily in Davos. One of the most ambitious business plans is that of the Indian pharmaceutical giant Serum, which already has a presence in the Netherlands and Great Britain, and now plans to expand in Africa. Serum President Adar Ponavala told Davos that “there has never been a better time to make vaccines” and that “we plan to expand to the African continent.” “And today they want investment. So we’re looking for the right investment environment. Of course, do not forget that many of these countries do not even have a regulatory framework for testing and marketing….”

Giannis Papadimitriou (AP, DPA, NZZ)

Source: Deutsche Welle