As Davos 2013 Nears, 'Resilient Dynamism' Not So Dynamic

by: MetalMiner

By Stuart Burns

The 2013 World Economic Forum will be held January 23-24 this year in the smart Swiss ski resort of Davos. Facing the 2,600 invited global leaders, academics and other hangers-on will be a set of challenges that seemed to have moved little since last year.

The list of hazards facing the global economy appears, if anything, to have gotten longer this year than last.

But before we go into that, a little more about the Forum as a whole. This year’s theme is “resilient dynamism,” a tag Chris Hume at CNN poked some fun at, saying that while resilience has been much in evidence this year, sadly lacking has been the dynamism.

We still have the euro debt crisis, we still have the U.S. fiscal cliff negotiations, and we still have slow global growth. Add to this the pre-Forum Global Risks 2013 Report that quite clearly highlights chronic financial imbalances and the possibility of a major systemic financial failure, and we have the top economic risks facing the global economy.

In fact, neither the report nor pre-Forum comments by political or business leaders offer much room for optimism.

Near the top remains Europe in spite of the improvement in sentiment following the ECB’s Mario Draghi's intervention in buying short-term debt last September. Figures released in November show the eurozone has entered a double-dip recession, dragged down by weak growth in the north and negative growth in the south.

Even Germany is barely set to grow a fraction of a percent this quarter, and news that the European trade balance has recently improved by marginally rising exports and falling imports should be tempered by the realization that the falling imports are a result of collapsing consumer demand.

“The… new reality that we face is a prolonged global economic malaise, particularly in major economies experiencing economic austerity,” Klaus Schwab, the German economist who founded the World Economic Forum (WEF) in 1971, said in a statement. Even some of his fellow countrymen are listening to him, as austerity measures imposed on the southern states look like they're being relaxed to avoid their economies imploding in 2013.

Europe doesn’t just suffer from too much debt and too harsh debt reduction policies – the exchange rate is working against the block, too.

Continued in Part Two, where we'll also look at challenges for France, Germany and the U.S.