Wednesday, January 28, 2009

Financial Crisis Hangs Over Davos Economic Summit

Wednesday, January 28, 2009
21:16 Mecca time, 18:16 GMT

Financial crisis hangs over Davos

The dismal economic outlook has cast a pall over the once glitzy forum in the Swiss resort

The World Economic Forum has got under way in Davos, Switzerland, as the international monetary fund slashed its economic growth forecasts, predicting the severe financial crisis would brake global growth to the slowest pace in six decades.

In a sharp downward revision of its November forecasts, the organsiation said: "World growth is projected to fall to 0.5 per cent in 2009, its lowest rate since World War II."

Earlier, PricewaterhouseCooper, the financial consultant company, had released a report in the Swiss ski resort, showing that confidence among business leaders around the world had hit a new low.

The findings showed that the hopes of more than 1,100 chief executive officers worldwide that the global recession would be short and sharp had all but evaporated.

Twenty-one per cent of respondents said they were very confident of growing revenue in the next 12 months, down from 50 per cent a year ago, the survey suggested.

'Drastic action'

The dismal economic forecasts have put a damper on the normally glitzy start of the annual four-day economic summit.

The financial crisis has also meant that politicians are taking centre-stage at the summit over the rich bankers and other financial heavyweights which normally run the show.

More than 70,000 job cuts were announced on Monday this week alone and world leaders are hoping to find ways out of recession.

Absent from Davos

Some of the world's most powerful bankers - taking the blame for the global economic crisis - have skipped this year's summit:

-Richard Fuld, the man who presided over the collapse of investment bank Lehman Brothers last September

-The former boss of Merrill Lynch pulled out at the last minute after losing his job at Merrill's new owner, Bank of America

-Goldman Sachs chairman Lloyd Blankfein is giving Davos a miss

-The chief executive of Citigroup is staying home as his company struggles to stay afloat

Arriving in Davos, Rupert Murdoch, the chairman of News Corp, a media conglomerate, said the economic crisis was deepening.

Murdoch said: "It's going to take drastic action to turn it around, if it can be turned around quickly. Personally, I believe it will take some time.

"The great majority of the people in the world are depressed and traumatised by the fact that their savings, the wealth in their homes or pension funds... a big percentage of it has disappeared."

Trevor Manuel, South Africa's finance minister, said there was a risk developed nations would emerge from the crisis with massive debts.

He said wealthy nations appeared to be adopting a "lemming-like approach, trying to get to the precipice without knowing what their money would buy".

Chinese influence

In a speech to the forum on Wednesday, Wen Jiabao, the Chinese prime minister, said that the global economic crisis was having a "big impact" on his country's economy and posed "major challenges."

Wen called on rich countries to "assume their responsibilities" and minimise the impact of the financial crisis on developing countries.

He said: When governments fufil their responsiblities with resolution and courage they can help maintain a stable financial order and prevent the crisis from causing more serious damage on the world economy.

"Political leaders must be forward looking they should be responsible to the entire financial community as well as to their own countries and people".

China has sent one of its biggest ever delegations to the forum, which some analysts interpreting it as a sign of Beijing's desire to engage with the rest of the world in finding a way out of the crisis.

'Perfect storm'

Officially opening the summit, Vladimir Putin, the Russian prime minister, called the international economic crisis the "perfect storm".

He said: "There is the notion of the 'perfect storm' when the natural elements come to a point and multiply their destructive capacity. This crisis looks exactly like this perfect storm."

Notably absent from the summit is a senior delegation from the United States, despite hopes that the new administration of Barack Obama will be able to lead a recovery.

Speaking to Al Jazeera, Lionel Barber, editor of London's Financial Times newspaper, said economies should be looking to the US for a way out of the crisis.

Barber said: "America is spending too much, and China is saving too little, so we need to get the economies back in balance, and the key players are America and China.

"The biggest myth in this story was that somehow the rest of the world could decouple from the American economy, that they were strong enough in other words to stand on their own two feet."

But, Barber said, this was wrong, "because they depend on American growth, American markets".

"So all eyes I'm afraid, even though they are on Davos this week, should be on Washington," he said.

Source: Agencies

Wednesday, January 28, 2009
19:56 Mecca time, 16:56 GMT

Brazil forum challenges Davos meet

The forum will focus on deforestation, development in the Amazon and indigenous rights

Tens of thousands of people have opened the World Social Forum in Brazil, offering an alternative to the World Economic Forum in Davos.

About 100,000 people, ranging from environmentalists to political activists and indigenous Indians, were taking part in the forum held in the city Belem to draw attention on the destruction of the Amazon forest, officials said on Wednesday.

The event was being staged in contrast to the meeting of the world's political and business leaders meeting in Switzerland.

The gathering, which is entering its second day, is set to focus on issues including deforestation and development in the Amazon as well as the rights of indigenous peoples and the global economic crisis.

Al Jazeera's Gabriel Elizondo, reporting from Belem, said: "The World Social Forum was built to be an anti-World Economic Forum.

"It is not for the rich, not for the well-connected and it is not 'invitation only' - just the opposite of everything in Davos.

"The interest in the Economic Forum might be down a little bit because of the global economic crisis, but here ... it is just the opposite. The interest has actually increased because of the global crisis."

Global crisis

Participants also said the global economic crisis gave legitimacy to their calls for alternative economic systems.

Elizondo said: "So many here are saying that now is the critical time for these people ... to really be getting their message out because of the state of the global economy.

"They say, 'We can't trust the people of Davos to fix the world economic situation because they are the ones ... responsible for causing it'."

The annual forum, now in its ninth year, began in 2001 in the southern Brazilian city of Porto Alegre.

Five Latin American leaders are expected to attend to the gathering.

Source: Al Jazeera and agencies

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