World Economic Forum Annual Meeting

20—23 janvier 2016 Davos-Klosters, Switzerland

Strong growth in India, relatively strong growth in the United States, disappointing but improving growth in Europe and Japan, slowing growth in China and weakness in many other emerging markets. This is the current economic picture of the world.

It’s been the worst start of the year on record for the financial markets – mostly down to China’s growth slowdown, says Tidjane Thiam, CEO of Credit Suisse. But the markets are overreacting: “People believe demand in China is decreasing, but there is evidence that the net demand for oil has increased. It’s therefore a supply problem, not a demand problem, which is good news for the world economy."

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It's true that the economic outlook isn't all bad, says Christine Lagarde, director of the International Monetary Fund. According to IMF predictions, the global economy will grow modestly in 2016. But there are four risks:

1. The triple transition of Chinese economy (moving from industry to service, export to domestic market, investment to consumption)

2. Commodity prices trending lower in the past year. (But the low rates have been accelerated by the fall in oil prices. “This will probably improve slightly as demand improves over the course of the next few months,” says Lagarde.)

3. Asynchronous monetary policies

4. The flow of capital from low-income economies to advanced ones.

Why GDP isn't enough

But what economists really need to look at, says Lagarde, is the way the economy is measured. Currently, it's inadequate. “We have to go back to GDP, the calculation of productivity, the value of things – in order to assess, and probably change, the way we look at the economy,” she says.

In this, she echoes the stance of economist Joseph Stiglitz, who said in a previous session:

“GDP in the US has gone up every year except 2009, but most Americans are worse off than they were a third of a century ago. The benefits have gone to the very top. At the bottom, real wages adjusted for today are lower than they were 60 years ago. So this is an economic system that is not working for most people.”


British Chancellor of the Exchequer George Osborne was hopeful that the United Kingdom could remain in the European Union – albeit a reformed one. “We need a better relationship, proper protections and lasting arrangements so that a large, non-EU member can co-exist with the EU, "he says. "These changes will resolve the uncomfortable relationship."

His approach would be “mature and measured”, he added. Britain wants to be part of a "more competitive" Europe, which is a source of innovation, business and growth. As such, the region shouldn’t be “priced out of the global economy”.

Chaired by

Martin Wolf


George Osborne

Haruhiko Kuroda

Christine Lagarde

Arun Jaitley

Tidjane Thiam