Davos: Global powerbrokers left their annual gathering in the Swiss ski resort of Davos and pursued by grim warnings of a tough year ahead for the world economy.
Compared to the upbeat mood of previous years, Davos 2008 was a distinctly gloomy affair dominated by talk of a US recession and a wider economic slowdown.
Condoleezza Rice, US secretary of state, had opened the high-altitude huddle of political leaders and corporate chiefs on Wednesday with some encouraging words about the “resilience” of the US economy.
But with international stock markets on a roller coaster ride in the wake of the crisis in the US subprime mortgage sector, few found Rice’s optimism reassuring, even though there were differences of opinion among the gathered chief executives over the scale and likely duration of a US contraction.
IMF director-general Dominique Strauss-Kahn said speculating on the precise nature of any recession was beside the point and governments should use fiscal as well as monetary policy to counter the headwinds.
“What is clear is there will be a serious slowdown and it needs a serious response,” he said. “We cannot rely only on monetary policy.”
On the eve of the Davos event, the US central bank, the Federal Reserve, had announced a spectacular interest rate cut of 75 basis points -- a move that drew less than rave reviews from some here.
“Reckless” and “dangerous” was the verdict of Stephen Roach, head of US investment bank Morgan Stanley in Asia.
Japanese Prime Minister Yasuo Fukuda, who will chair the annual Group of Eight (G8) summit in July, gave a keynote speech in which he warned against a “excessively pessimistic” view of the problems ahead.
“But at the same time we do need to have a sense of urgency as we engage in coordinated action,” he said. Confirming its enduring pulling power, this year’s Davos gathering drew nearly 30 heads of state or government, more than 110 cabinet ministers and several hundred corporate titans.
On the geopolitical front, debate focused on efforts for peace in the Middle East, the stand-off over Iran’s nuclear programme and the rise of China and India.
Pakistan President Pervez Musharraf stopped off on a European tour aimed at addressing concerns over the credibility of upcoming elections following the assassination of opposition leader Benazir Bhutto.
And Afghan President Hamid Karzai offered delegates a gruesome portrait of the extremist violence infecting his region, citing cases of bombers targeting schoolchildren, elderly women being decapitated and teenagers being burned with acetylene torches.
“This is beyond imagination even for the cruellest of minds,” Karzai said, as he called for a renewed, coordinated global effort to tackle the “scourge of terrorism.”
Development was also on the agenda, with the now-established Davos double act of billionaire philanthropist Bill Gates and rock star activist Bono striving to tweak the gathering’s collective conscience.
Bono, decrying the international community’s failure to live up to its promises on poverty alleviation, said it was time to go beyond purely “moral” statements of intent.
“I would like to turn our moral compact into legally binding contracts. Then my advice to the developing world? Get a good lawyer and haul our asses into court,” the U2 frontman said.
The Davos event has long prided itself on showing the caring side of capitalism, although participants have often been criticised for trumpeting big ideas on big issues in public, while actually expending most of their energy on corridor schmoozing and backroom deals.
But if Davos is the ultimate networking opportunity, it doesn’t come cheap. Some 1,000 of the world’s largest businesses pay $38,700 apiece for annual membership to the exclusive club -- not counting the extra 11,000 euros per person to attend the annual meeting.