“Davos”: Global Economy Not Heading toward “Normality” in 2024

The world is experiencing an unstable equilibrium amid more moderate economic conditions overshadowed by a range of geopolitical risks, according to the final session of the Davos 2024 Forum.

As the World Economic Forum concluded its activities, European Central Bank (ECB) President Christine Lagarde and her peers agreed that the prospects of a decline in the inflation rate and a recovery in global trade encourage investors somewhat, despite war conditions.

 Lagarde told the audience at the Swiss resort of Davos, “Normalization — that’s what we have begun to see,” she remarked before noting that “It is not normality that we’re heading to."

The six-member session was tasked with summarizing the mood at the Davos forum, with participants tending to embrace a bolder global outlook, highlighting the likelihood that a severe recession will likely be avoided despite unprecedented tightening of monetary policy to control inflation rates.

Geopolitical concerns have at times undermined this optimism, with wars in Ukraine and the Middle East looming, and the tensions of the Red Sea crisis as well. 

Many attendees also received with concern Donald Trump's victory in Iowa last Monday, which put him on the path to his candidacy for the upcoming presidential elections for the Republican Party.

WTO Director-General Ngozi Okonjo-Iweala GCON said that “there is a lot of uncertainty, of course, about all the elections that we see across the world and what might come out of them.” I agreed with Lagarde's point that the world "may be heading toward a restoration of normalcy," but that the process is, at the same time, certainly "not normality as we knew it."

The possibility of Trump winning the US presidency for a second time was repeatedly cited during a panel discussion. Lagarde took an optimistic stance, saying that “the best defense is attack,” and urged pressure to strengthen Europe by establishing a “genuine single market,” while German Finance Minister Christian Lindner was more conservative.

He continued: "We talk a lot about Donald Trump in Europe, but doing our duty represents the best way to prepare for him winning a possible second term, and this includes our capabilities to defend ourselves."

Lindner chose to take the more positive direction. He described his country as suffering from some problems, in contrast to the "sick man" comparison that has been associated with it again recently. He was also more optimistic about the global economy. He concluded by saying, "It is a new normal that we must be prepared ... 2023 has given me hope."

On his part, David Rubenstein, co-founder and co-chairman of the Carlyle Group said that the reality is that regardless of who wins the election next November, the United States faces a political stagnation, with all the risks involved for the rest of the world.

“Almost everything that every candidate says probably won't be true about what's going to happen in the future, because they probably won't be able to deliver what they claim they're going to do,” added Rubenstein.

Financial conditions in the United States were among the concerns frequently expressed during the week of events. 

Rubenstein specifically mentioned the difficulties facing the United States. He added: "If we do not solve this, something will happen to the US dollar. If the United States cannot improve the process of regulating its financial behavior, at some point, people will do what they did to the British pound and the Dutch guilder years ago."

Singapore President Tharman Shanmugaratnam stated that “the most important and most overlooked area of public economic policy is financial reform.”

Earlier in the forum week, Deutsche Bank CFO James von Moltke described the situation as a “wow” moment for him because he was amazed at the resilience of economies and financial markets, while Harvard professor Ken Rogoff worried that “the geopolitical situation is something I have never seen before in my career.”