The world economy is booming. Corporations rake in billions, billionaires earn splendidly. However, little of the wealth is received by ordinary citizens. That has to change, demanded economists on the occasion of the World Economic Forum in Davos. The ongoing […]
The world economy is booming. Corporations rake in billions, billionaires earn splendidly. However, little of the wealth is received by ordinary citizens. That has to change, demanded economists on the occasion of the World Economic Forum in Davos.
The ongoing boom in the global economy increasingly raises the question of whether ordinary people also benefit from growing prosperity or only the super-rich. At the start of the World Economic Forum in the Swiss Alpine town of Davos – the Mecca of corporate executives and heads of government – there was even criticism from within our own ranks that economic growth was often seen as an end in itself.
“Too many people are still excluded from the recovery,” said the head of the International Monetary Fund (IMF), Christine Lagarde, in Davos. Just minutes earlier, the IMF had raised its growth forecast for this year and next. “All the signs point to growth,” said Lagarde, warning against complacency.
Particularly in some of the developing and emerging countries, the people would not receive any of the good global economic development. People in many industrialized nations have a similar feeling because their real wages have only risen moderately, added IMF chief economist Maurice Obstfeld. He also saw in this a reason for the strengthening of populist and nationalist forces in the countries.
Unions see a distribution problem
The World Economic Forum itself was in the same direction in a study published on Monday. Their result: economic policy is still too focused on short-term growth despite worrying social inequality. The population, on the other hand, expect a “net result” and that is “broad, sustainable progress in living standards,” said WEF manager Richard Samans. International managers are also increasingly critical of globalization, as a survey by the consulting firm PwC showed.
“The business world has enormous potential to initiate fundamental changes,” said the Pope’s greeting. He called on the participants of the WEF to work together so that no one is forgotten in an increasingly global world. “It is of great importance to protect human dignity, especially by giving all people real opportunities for their development and by pursuing social policies that favor families.”
Trade unions and aid organizations have recently repeatedly criticized the fact that the growth has benefited the already rich in particular. “The problem is not how wealth is generated, but how it is distributed,” said Philip Jennings, head of the UNI Global Union. Jennings spoke of a “disease” for which a cure must be found.
More than 3,000 participants are expected at the meeting in Davos, including around 70 heads of state and government such as US President Donald Trump, French President Emmanuel Macron and Chancellor Angela Merkel. Hundreds of CEOs from global corporations also come to Davos. The WEF wants to offer itself as a motor for international cooperation. Critics accuse the meeting of being part of the problem.
Monetary Fund sees perfect opportunity for reform
IMF boss Lagarde called on those in charge of the world to act now when the economy is doing well. The IMF expects global economic growth of 3.9 percent each year this and next – 0.2 percentage points more than last prophesied in October and also more than in previous years. The business leaders and economists surveyed by PwC even assessed the situation as better than ever before.
The IMF particularly praised Europe and Asia for their development. But also large emerging countries such as Brazil and Russia, which have stumbled in the meantime, have gotten back on their feet. The experts also attribute the tax reform pushed by US President Donald Trump to have a stimulating effect on the USA and its trading partners.
For Germany, the IMF raised its forecast for economic growth in the current year by half a percentage point to 2.3 percent. This would mean that the Federal Republic of Germany would hardly do any worse than last year, for which the IMF comes to a growth of 2.5 percent. The IMF is also more confident for 2019 than it was last time.
Now is the right time to remove obstacles to economic growth, invest in infrastructure and let more people participate in the growth, stressed Chief Economist Obstfeld. “Otherwise,” he warned, referring to the severe economic and financial crisis ten years ago, “the next downturn will come faster and be more difficult to combat.”