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January 22, 2014 6:28 pm
Executives attending the World Economic Forum are without doubt more confident about the economic outlook than they have been since the financial crisis erupted in 2007-08. But do not underestimate the ability of the Davos business elite to find new things to worry about.
The optimism of business people reflects positive news on the economy, particularly from the US and the UK.
“The macroeconomic environment is the brightest it has been since before the crisis, when the storm clouds started to arrive,” said Ken Jacobs, chief executive of Lazard, the investment bank. “The best part is the US where there is a good-to-sustainable recovery under way and we have a US-led global recovery for the first time since the early 1990s.”
John Chambers, Cisco Systems’ chief, agreed that the US was leading the way for economic recovery, followed by the UK.
The rest of Europe is at least stable, although Sir Martin Sorrell, chief executive of the big advertising group WPP, pointed out that the lack of labour market reform was still holding the continent back.
Barry Salzberg, Deloitte’s global chief, said his clients were more optimistic, and predicted that positive news could even lead to “some level of reindustrialisation in developed countries”.
However, in an about-turn from previous years, when the glow of strong growth from emerging markets offset the gloom in the US and Europe, this time countries such as Brazil, China and India are causing concern, with intensifying debate about the need for structural reforms.
Samir Brikho, chief executive of Amec, the UK-based oil services company, said one main reason for his attending the forum this year was to gauge the extent to which slower-than-expected growth in China could affect demand for commodities and the plans of his company’s clients in the energy sector.
Another clear shift of focus among business people spotlights the technology sector, bringing an upbeat tone to the start of proceedings, compared with the gloom spread by the ominipresent bankers and financiers in previous years.
Marc Benioff, the chief executive of Salesforce.com, taking part in one of the opening Davos sessions on the digital context, pointed out that technology and telecoms executives were taking the stage where Nobel prize-winning economists had previously set the tone for the forum.
This year would be “the tipping point”, said Marissa Mayer, chief executive of Yahoo, when interconnected mobile devices (the “internet of things”) and the sharing economy (a market in which customers share products and services) would revolutionise businesses.
Randall Stephenson, chief executive of AT&T, said:“There isn’t an industry that won’t be radically impacted over the next five years [by these two developments].”
At this year’s forum, many corporate leaders say they want to boost engagement, mindful of the need to defuse potential backlashes against rising inequality.
Paul Polman, chief of Unilever, said businesses needed to forge alliances with non-government organisations and other social groups, to promote a more inclusive – and moral – agenda.
Nobody in the business community, however, thinks that “engagement” will be a magic wand to solve the rising social tensions. And as inequality rises, this could generate more political uncertainty, they say.
Pierre Nanterme, chief of Accenture said: “What I am concerned about is the rise of the extremes in Europe . . . because of the lack of inclusion, and high unemployment and inequality.”
Other shadows hang over the technology-fuelled optimism, in the form of consumer concerns about online privacy and worries about state-sponsored surveillance of the internet, provoked by Edward Snowden’s revelations.
As the technology executives enjoy their moment in the Davos limelight, concerns linger that excitement about the “internet of things” – and the wealth it is creating among tech entrepreneurs and engineers – may itself backfire against the leaders of the sector, as it did against the lords of high finance in 2008.
In an off-the-record session on Wednesday, one chief executive from outside the tech industry lamented the absence of a new generation of technology executives from the debate about environmental sustainability – a constant cause of Davos hand-wringing.
“It should have been Mark Zuckerberg [the Facebook founder, who is not attending the forum] and his friends here saying, ‘I now dedicate myself to a better world,’ ” he said.
Additional reporting by John Gapper
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