We have updated our Privacy Policy and Terms of Use for Eurasia Group and its affiliates, including GZERO Media, to clarify the types of data we collect, how we collect it, how we use data and with whom we share data. By using our website you consent to our Terms and Conditions and Privacy Policy, including the transfer of your personal data to the United States from your country of residence, and our use of cookies described in our Cookie Policy.
{{ subpage.title }}
Is the global economy finally on the right track?
How’s the global economy doing… really? When it comes to the world’s post-COVID recovery, it’s a tale of two economies: the United States and everyone else. On GZERO World, Ian Bremmer sits down with economist and author Dambisa Moyo for a hard look at the health of the world’s finances and the impact of geopolitical crises in Europe and the Middle East on trade flows and inflation.
Right now, US indicators are strong, but Germany and the UK are slipping into mild recessions, and China’s collapsing real estate sector, local government debt, and exodus of foreign investment is dragging the world’s second-largest economy into stagnation. Not to mention, Global South countries are holding record amounts of debt. So what does it all mean moving forward? Is the global economy still shaking off its post-Covid hangover or are some of these problems more entrenched?
“We need to be growing at 3% per year in order to double per capita incomes in a generation which is 25 years,” Moyo says, “Most of the global south is growing below that number, materially.”
Ian Bremmer and Dambisa Moyo unpack the confusing state of the global economy, China’s economic woes, and where they see the biggest potential for growth in developing economies during the next decade.
Catch GZERO World with Ian Bremmer every week at gzeromedia.com/gzeroworld or on US public television. Check local listings.
- China’s economy in trouble ›
- Ian Explains: Why China’s era of high growth is over ›
- Struggling for economic progress as global recession looms in 2023 ›
- Dambisa Moyo: Europe's energy transition needs more than a "band-aid solution" ›
- The unintended effect of US-China economic breakup ›
- What saved the global economy from another Great Depression? ›
- Global economy headed to a recession ›
- What geopolitics stories could still blow up the global economy? ›
The global economy: good news and bad news from economist Dambisa Moyo
Listen: In the latest episode of the GZERO World Podcast, Ian Bremmer sits down with economist, author, and member of the UK parliament’s House of Lords Dambisa Moyo for a hard look at the health of the world’s finances, the impact of geopolitical crises in Europe and the Middle East on trade flows and inflation, and how China’s economic woes are impacting everyone else.
Right now, US indicators are strong, but Germany and the UK are slipping into mild recessions, and China’s collapsing real estate sector, local government debt, and exodus of foreign investment is dragging the world’s second-largest economy into stagnation. Not to mention, Global South countries hold record amounts of debt. So what does it all mean moving forward? Is the global economy still shaking off its post-Covid hangover or are some of these problems more entrenched?
Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform, to receive new episodes as soon as they're published.
Mark Carney sees more problems than solutions emerge from Davos
Davos is a good place to recognize problems but not such a good place to solve them, according to Lord Mark Malloch Brown, a British politician and diplomat who was in the Swiss Alps this month. “A new generation of modest, listening and empathetic leaders is needed – the antithesis of Davos Man,” he tweeted.
The World Economic Forum has steered so far to the north of public opinion that it is now being used as a punchline – the New York Times noted that “the Davos Consensus” is now a counter-indicator of what is likely to happen. “Trump is already the president at Davos — which is a good thing because the Davos consensus is usually wrong,” said Alex Soros, son of George and chair of the Open Society Foundation, on a panel at this year’s forum.
Yet, there is a reason why 3,000 of the world’s most powerful people make the mid-winter trek to Switzerland every year and line up in the cold to pass through security outside the Grandhotel Belvédere: It’s valuable to understand what the global elite is thinking and to recognize the many problems the world is facing.
GZERO Media caught up with Mark Carney, former governor of the Bank of England and Bank of Canada, who now serves as chair of Brookfield Asset Management and Bloomberg Inc. (as well as acting as a UN special envoy on climate change), to hear what he picked up in Davos.
Economic optimism
On the global economy, the general feeling was of a resilient US economy contrasting with a stagnant Europe, particularly as Germany goes through a historical industrial restructuring moving away from a model built on cheap gas from Russia and exports to China.
The general outlook for China was bearish, with the downside of its ongoing real estate adjustment outweighing the boost from China’s growing competitiveness in electric vehicles and clean energy and its efforts to rebuild exports at a time when supply chains are being “de-risked.”
Premier Li Qiang told Davos that China’s economy is open for business, but Reuters reported that investors who attended a closed-door lunch with him remained skeptical about China’s charm offensive.
This points to more stimulus, Carney said. Indeed, Bloomberg reported last week that the Chinese government is considering a rescue package for slumping stock markets (the CSI 300 was down 11.4% last year, its third year of negative growth, while Hong Kong’s Hang Sen was down 14% in 2023).
On monetary policy, Carney said the expectation among many attendees was that interest rates have peaked but that there was only limited appreciation that the pace of reductions may be slower than the market has been pricing. During Davos, market expectations were that the Fed would begin cutting in March and then cut again another four or five times this year. But Carney believes the Fed will probably wait until June to begin cutting, followed by another one or two cuts this year. “However, if that’s because the US economy is stronger than expected, it would be net positive,” he said.
Global crises
Geopolitics weighed heavily in the Swiss Alps. While US-China relations appear to have stabilized in the short term, the Middle East conflict was widening alarmingly. Reuters reported that there were no practical advances on a Palestinian state, or even a cease-fire, at Davos.
The head of the Palestinian Investment Fund estimated that $15 billion would be needed just to rebuild houses in Gaza. Arab states said they would not fund reconstruction until there was a lasting peace, by which they meant a Palestinian state.
Yemeni and Iranian officials told Davos audiences the attacks in the Red Sea would not stop until Israel ended the war in Gaza. The CEO of oil giant Saudi Aramco warned that the world might see a shortage of oil tankers if the attacks continue, forcing shippers to choose longer alternative routes.
Bankers warned that increased shipping costs and the possibility of an oil price rise could prove inflationary. And attendees took note of the comments of Saudi Arabia’s Prince Turki al Faisal that “the present leadership of Hamas, the PLO, and of Israel should be excluded from any participation in any future political role.”
Good AI vs. Bad AI
AI was everywhere, with businesses focused on how to implement it, first in basic administration and more profoundly in re-engineering the production, sales, and marketing. The core question of whether workers will benefit — and when — was more hotly debated. Some, including the IMF, saw widespread disruption to jobs (up to 40% according to the Fund). The techno-optimists pointed to the ability of AI to re-skill workers rapidly and past experiences with major technological changes that belied the ‘lump of labor fallacy.”
Carney felt that AI would begin to have major impacts on productivity and growth by the end of the decade and that, history teaches, it would take a comprehensive response of business, government, and academia to ensure that workers share in the benefits.
Climate change
Coming less than two months after what was regarded as a business-heavy, successful COP28 in Dubai and with AI dominating much of the discussion, the climate change debate was relatively muted. But Carney said it would be a mistake to consider that the transition has been relegated down the agenda.
He said that it is now so core to the fundamental business model of most companies that it has become embedded as a driver of competitiveness.
Carney noted that five years ago, $500 billion was invested in the transition; last year, that number was $1.8 trillion, nearly double what was invested in oil and gas. The challenge is that this number needs to more than double again to about $4 trillion by the end of the decade.
He said that the transitions toward clean energy and AI actually work in tandem since, while AI is relatively capital-light, it requires a lot of data and computing power, which in turn requires clean energy. And AI solutions will help with optimizing grids, heating and cooling systems, and even supply chains.
It was noticeable that the backlash against Environmental, Social, and Corporate Governance, or ESG, meant it was rarely mentioned in Davos. Attendees like Canadian Deputy Prime Minister Chrystia Freeland were more focused on the new buzzwords – “supply chain resilience” – trying to convince investors that Canada has the critical minerals and clean energy they need, as businesses try to diversify sources away from China.
Sustainability is now about “resiliency building” that contributes to profitability, not just altruism.
Milei’s message
Javier Milei, the new Argentinian president, burst onto the main stage at Davos like an arsonist with a blowtorch, lambasting the proponents of state intervention and concluding with the rallying cry: “Long live freedom, damn it.” He said the Western world is facing a significant threat because its leaders have been co-opted by a worldview that leads to socialism and economic deprivation.
“We are here to tell you that collectivist experiments are never solutions to the problems that affect citizens. Trust me, no one is better than Argentina to provide testimony on this,” Milei said.
At the time of Milei’s inauguration, annual inflation stood at 143%, the currency had plunged, and four out of 10 Argentines were living in poverty. He has promised radical reforms, including deregulation and devaluation of the currency, and there was no evidence that he was prepared to dilute his agenda in his speech.
He was scathing about “neo-Marxists” who have “co-opted the common sense of the Western world” when it comes to the climate change agenda and said he considered all talk of “market failure” to be an oxymoron.
Carney has considerable experience in navigating market failures, having been in the Cash Room meeting in the US Treasury as Bank of Canada governor during the financial crisis, alongside other G7 finance ministers and central bankers, when the decision was reached to backstop the banking system with liquidity to prevent a repeat of the Great Depression.
“All ideologies are prone to extremism, and capitalism loses its sense of moderation when the belief in the power of the market enters the realm of faith,” he wrote in his book, “Values.” “There are no libertarians in a financial crisis.”
But he said he found Milei’s speech to be entertainingly provocative. “It was good theatre and raised some important issues,” he said, particularly his praise for entrepreneurs and his assertion that state control does not depend solely on owning the means of production but can include regulation. Carney noted, however, that Milei appeared oblivious that he was speaking to some of the world’s most successful entrepreneurs (such as Bill Gates), few of whose actions echo the “Atlas Shrugged” school of poverty elimination.
Carney concluded that, “where you stand depends on where you sit,” and that Milei’s vehemence was undoubtedly influenced by a long history of high levels of state intervention and indebtedness in Argentina.
After his speech, Milei sat down with International Monetary Fund Managing Director Kristalina Georgieva to discuss Argentina’s debt problems. He remained defiant: “Free enterprise capitalism is the only tool we have to end hunger and poverty,” he said.
Milei will have to face down entrenched opposition from those who rely upon rents from the state apparatus if he is to rid his country of the unwanted tag of the “Argentina paradox,” the world’s most glaring example of a developed economy that went backward.
AI's impact on jobs could lead to global unrest, warns AI expert Marietje Schaake
The 2024 World Economic Forum in Davos was dominated by conversations about AI and its potential as well as possible pitfalls for society. GZERO’s Tony Maciulis spoke to former European Union parliamentarian Marietje Schaake about the current regulatory landscape, a recent report from the International Monetary Fund (IMF) saying as many as 40% of jobs globally could be lost or impacted by AI, and how that might give rise to unrest as we head into a critical year of elections.
Marietje Schaake, International Policy Fellow, Stanford Human-Centered Artificial Intelligence, and former European Parliamentarian, co-hosts GZERO AI, our new weekly video series intended to help you keep up and make sense of the latest news on the AI revolution. Sign up for the GZERO AI weekly newsletter to keep up with all things AI and find out when new episodes are published.
For more about AI at this year's World Economic Forum, watch our Global Stage discussion, Making AI Work for the World.
- This year's Davos is different because of the AI agenda, says Charter's Kevin Delaney ›
- How is the world tackling AI, Davos' hottest topic? ›
- Is the EU's landmark AI bill doomed? ›
- Rishi Sunak's first-ever UK AI Safety Summit: What to expect ›
- UK AI Safety Summit brings government leaders and AI experts together ›
- Singapore sets an example on AI governance ›
- ChatGPT on campus: How are universities handling generative AI? - GZERO Media ›
- AI regulation means adapting old laws for new tech: Marietje Schaake - GZERO Media ›
- Ian Explains: How will AI impact the workplace? - GZERO Media ›
- How AI is changing the world of work - GZERO Media ›
Mark Wiseman on smart choices today vs. eating gruel tomorrow
As business and world leaders converged on Davos this week, we learned that the WEF’s Chief Economists Outlook saw more than half of chief economists predicting the global economy will weaken this year. What does today's global uncertainty mean for business leaders? For your retirement plan? GZERO caught up with Mark Wiseman, a global investment manager, business executive, and expert in private equity, alternative investments, long-term investments, and sustainability, at Davos for some answers. Wiseman is also a senior advisor with Boston Consulting Group and sits on the Board of NOVA Chemicals.
This Q&A has been edited for length and clarity.
GZERO: Often the criticism of Davos is that it's a gathering of the wealthy and powerful that produces few results. What's your sense? Is this year different?
Mark Wiseman: Everything's changed in the last 1,000 days.
Think where we were 1,000 days ago. We were still in the pandemic, trying to understand what that meant for the world and society. China and the US were only in the early innings of decoupling. There wasn't a major kinetic war taking place on the European continent. It looked like peace in the Middle East was closer than ever.
Today, it looks closer to a complete breakdown of society and all-out war.
In the shadow of the last 1,000 days, this particular Davos, which is the first real one post-COVID, geopolitics are incredibly important, but the geopolitical players, by and large, are not here like they used to be.
Davos has become a business forum. Businesses are worried about politics. Businesses are worried about the US election. Businesses are worried about commodity prices. Businesses are worried about China.
But the politicians are not here in the numbers they've ever been in the past.
There's something wrong. We've got this massive geopolitical overhang and it's a lot of business people talking to each other about geopolitics, whereas the actual participants aren't by and large in the room.
GZERO: What do you attribute that to?
Wiseman: More than a little bit of it is the liberal elite rap that Davos has received. Today, if Trudeau were to show up at Davos, it would be a front-page story about him being part of the elite in the Swiss Mountains, and he can't afford that press.
But it's too bad, given how important dialogue about geopolitics is between corporate leaders and political leaders right now.
“Building trust takes years while losing trust takes a moment.”
GZERO: The overarching theme of Davos this year is rebuilding trust. An AP poll last year found 88% of Americans said they had little or no trust in banks and financial institutions. What are your views about how to repair that public relationship?
Wiseman: Building trust takes years while losing trust takes a moment. I think that we've had lots of moments and we haven't had enough years, consistently, to rebuild trust in financial institutions. And part of that is the underlying profit motive that seems to drive everything in many of our financial institutions.
Obviously, there is an issue of trust in terms of the public writ large having to step up time and again to bail out financial institutions that have taken unwarranted risks. It's not just a US phenomenon. It's Credit Suisse here in Switzerland. It's some of the property players in China. Both banks and regulators need to do a better job in also understanding the role of financial institutions in society – in terms of providing capital for economic growth and the benefit of everyone.
And because we've had so many moments of mistrust, the pendulum has swung also among regulators in terms of de-risking the system.
And so the regulators, because of a not-unwarranted response from the public, are essentially solving for a single variable, which is systemic risk. We're going to avoid systemic risk because God knows we don't want to have to bail out another bank.
And in reality, yes, you wanna control systemic risk, but you also want to assure capital formation and you want to ensure access to savings products and insurance products that are fairly priced for individuals so that they can mutualize risk.
GZERO: There are a lot of folks in developed countries who are in their 30s, they've been working for a decade and are finding they have to make hard trade-offs now financially. What do you see as the outlook for people that are, let's be frank, approaching middle age and are not in the same position as earlier generations when it comes to building wealth?
Wiseman: The baby boomers have just benefited immensely from the disproportionate post-war growth and bull market. But that's an outlier. If you were in the 1940s, you would have had the same issues about buying a house and if you were in the 30s, you'd be worried about feeding yourself for most people in society.
I do think the one major change though is retirement. You will in all likelihood live significantly longer than your parents lived. Your children will live significantly longer than you live. That means that you and your children will in all likelihood have to rely on your retirement savings for a longer period.
And Social Security is … like a woolly mammoth in the room. One that American politicians are not addressing and it's coming very, very quickly, and the fact is, unless you're looking after yourself, there's not going to be enough there for you.
“ … the choice you made today was actually a choice as to whether you wanted a nice private retirement home with your own nurse or living in a government facility, eating gruel.”
GZERO: What should governments be doing to avoid a situation in which the younger generations are supporting older generations in an unsustainable fashion?
Wiseman: China is actually interesting, very similar to the US because you've got the national Social Security Fund, which essentially is underfunded and has some of the same issues as US Social Security.
The only reason why China is arguably better off is because it's got a high savings rate. People don't have 23 credit card companies dropping new cards in your mailbox every day.
Americans don't save, they consume, which has been driving the economy. I used to do this little speech, and I'd hold up a cell phone. Often it was a bunch of people coming to work for the firm. They’d be maybe 20 years old, and I'd ask “How often do you change your cell phone?” and they would say “every year” or “every 18 months.”
I said, “Boy, that's a pretty big cost, it's $600 or $700. What if you changed your phone every 2 1/2 years instead of every year?” And by the way, I've got one that still has a little push button on the bottom; I do take my own advice.
If that's 700 bucks that you save instead and then compound that out, you can think about the choice you made today as actually a choice as to whether you wanted a nice private retirement home with your own nurse or living in a government facility, eating gruel. That was the decision you made when you bought your phone. That's a huge decision, but no one thinks that way.
For more from Mark Wiseman, check out his article about the fundamentals of investing: risk and return.
Milei makes fiery Davos debut
Javier Milei’s first foray onto the international stage wasn’t so much to deliver a maiden speech as to give a “brazen hussy of a speech,” to use Winston Churchill’s memorable phrase.
The newly elected Argentinian president blazed into Davos like a comet and delighted libertarians around the world with his unabashed advocacy of free markets. He concluded with a rallying cry for the world’s wealth creators: “Long live freedom, dammit!”
The Western world is facing a significant threat because its leaders have been coopted by socialism, which leads to poverty and economic deprivation, he said. Motivated by good intentions, or the desire to belong to a “privileged caste,” leaders have abandoned the model of freedom for different versions of collectivism.
“We are here to tell you that collectivist experiments are never solutions to problems that affect citizens,” he said. “Trust us, no one is better than us Argentinians to provide testimony on these issues.”
Milei was elected to power at a time when inflation in Argentina is running at 140% annually and GDP is forecast to shrink 2.5% this year. The South American country defaulted on its debt in 2020. Milei has promised radical reforms, including deregulation and devaluation of the currency.
There was no evidence that he is prepared to dilute his agenda in his speech in Davos on Wednesday.
Social justice is not just, he said, and does not contribute to the well-being of the country. The state is financed by coercion, in the form of taxes. “The higher the tax burden, the higher the coercion.”
Milei outlined his version of libertarianism as comprising private property markets free from state intervention, regulation, and “the radical feminist agenda.”
He was scathing about “neo-Marxists” who have “coopted the common sense of the Western world” when it comes to the climate change agenda. “Fortunately, there are more and more of us who are daring to make our voices heard because we see that if we don’t truly, decisively fight against these ideas, the only possible fate is for us to have increasing levels of state regulation, socialism, poverty, and less freedom, and therefore worse living standards.”
“The market is a discovery process in which capitalists will find the right path as they move forward,” he continued, arguing that states should not interfere in the discovery process of capitalists. Punishing them “will produce less, and the (economic) pie will be smaller,” he said, calling successful entrepreneurs “social benefactors” for contributing to society’s well-being. “Ultimately, a successful entrepreneur is a hero.”
Perhaps not surprisingly, this argument had Davos billionaires rattling their Rolexes in agreement.
Podcast: Trouble ahead: The top global risks of 2024
Listen: In a special edition of the GZERO podcast, we're diving into our expectations for the topsy-turvy year ahead. The war in Ukraine is heading into a stalemate and possible partition. Israel's invasion of Gaza has amplified region-wide tensions that threaten to spill over into an even wider, even more disastrous, even ghastlier conflict. And in the United States, the presidential election threatens to rip apart the feeble tendrils holding together American democracy.
All those trends and more topped Eurasia Group's annual Top Risks project for 2024, which takes the view from 30,000 feet to summarize the most dangerous and looming unknowns in the coming year. Everything from out-of-control AI to China's slow-rolling economy made this year's list.
GZERO Publisher Evan Solomon sat down with Eurasia Group Founder and President Ian Bremmer and Chairman Cliff Kupchan to work through their list of Top Risks for 2024 alongside Susan Glasser, staff writer at The New Yorker and co-author of "The Divider: Trump in the White House, 2017-2021"; Zeid Ra'ad Al Hussein, CEO & President of the International Peace Institute and former United Nations High Commissioner for Human Rights; and Marietje Schaake, International Policy Fellow, Stanford Human-Centered Artificial Intelligence. The big throughline this year? Events spiral out of control even against the wishes of major players. Whether it's possible escalation between Israel and Iranian proxies, Chinese retaliation to the result of the Taiwanese election, or central banks finding themselves squeezed into a corner by persistent inflation, the sheer number of moving parts presents a risk in and of itself.
Take a deep dive with the panel in our full discussion, recorded live on January 8.
Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform, to receive new episodes as soon as they're published.
Podcast: Talking AI: Sociologist Zeynep Tufekci explains what's missing in the conversation
Listen: In this edition of the GZERO World podcast, Ian Bremmer speaks with sociologist and all-around-brilliant person, Zeynep Tufekci. Tufekci has been prescient on a number of issues, from Covid causes to misinformation online. Ian caught up with her on the sidelines of the Paris Peace Forum outside, so pardon the traffic. They discuss what people are missing when they talk about artificial intelligence today. Listen to find out why her answer surprised Ian because it seems so obvious in retrospect.
Subscribe to the GZERO World Podcast on Apple Podcasts, Spotify, Stitcher, or your preferred podcast platform, to receive new episodes as soon as they're published.