Wide consensus made at Davos on global crises

Participants attend the welcome reception in the Congress Center for the World Economic Forum (WEF) 2022 Annual Meeting in Davos, Switzerland, May 22, 2022. [Photo/Xinhua]

Cooperation remains primary means to address common risks, forum told

While the conflict in Ukraine, price inflation, food and energy security, and climate change have dominated the World Economic Forum in Davos, experts say progress has been made on understanding the scale of implications of the crises and its multilayered spillover effects globally.

Discussions at the annual meeting emphasized that international cooperation remains the primary means to address common global risks and to avoid global economic fragmentation.

Speaking at the closing session of the Davos Forum, Borge Brende, president of the WEF, said: "We are better off in a world where we meet and act together. ... We should recreate a win-win world, not beggar thy neighbor, but prosper thy neighbor."

On climate change, 20 companies with a market cap representing about $8.5 trillion across five continents and eight countries joined the First Movers Coalition, which was launched at COP 26 to decarbonize the heavy industry and long-distance transport sectors responsible for 30 percent of global emissions.

"Now, we have 54 of the leading companies in the world that have committed to using their procurement power to green their supply sides, so they will only buy from suppliers in the future that leave less of CO2 footprints," he said.

Brende also commended China's latest commitment to tackle climate change. During the annual meeting, China announced to plant and conserve 70 billion trees within 10 years to green the planet, combat climate change and increase forest carbon sinks.

Experts also called for greater efforts from all countries to further climate commitments, restore global supply chains, and cope with the ramifications of the Russia-Ukraine crisis on the world economy.

John Beirne, vice-chair of research at think tank Asian Development Bank Institute, said:"Greater impetus is needed on efforts toward energy transition and diversifying global supply networks. Building resilient supply chains remains a cornerstone objective for sustainable recovery, as was learned during COVID-19."

While actionable policies for trade diversification are needed at the national level, Beirne said this is a challenge given the complexity of global supply chains comprising of economies at different stages of economic development and sectoral distributions.

High levels of interconnectedness across economies underscore the need for continued and enhanced efforts on international cooperation to address this. "These efforts are even more urgent in the context of sanctions on Russia, which could threaten a recession in Europe, with spillovers abroad," he said.

Christopher Bovis, international business law professor at the University of Hull in the United Kingdom, said: "The Davos Economic Forum has never failed to capture the pulse of themes and developments of the world economy from developing and developed nations."

Food and energy security

Apart from geopolitical turmoil arising out of the Ukrainian conflict, Bovis said food and energy security were rarely featured in global risk matrices.

"Ukraine and the severe disruptions in food and gas revealed that the market is interdependent for both commodities to the extent that the entire supply chain networks rely on just-in-time deliveries to maintain competitive positions and comply with domestic affordable policies for consumers," he added.

"Interestingly, the World Economic Forum never registered food security as a concern, and often indirectly critiqued the function of the EU Common Agriculture Policy and the farm and food subsidy directed to the EU Member State national farmers."

He pointed out that the result of the Ukraine conflict and its disruption to food supplies will have the issue reevaluated. "It will bring the attention to the most profound development of this year's workings－inflation is back and it is going to be part of the economic system for the foreseeable future. The world's economic planners were taken by surprise," he added.

The Ukraine conflict has delivered a major shock to already fragile global food and fertilizer markets. David Beasley, executive director of the World Food Programme, warned that the world is likely to face a food availability issue in a year's time, which will impact everyone.