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Economic Forum in Davos, Switzerland, where elites make bold predictions that turn out to be wrong

2023-01-13 17:26:05Biznes SHKRUAR NGA REDAKSIA VOX
Economic Forum in Davos, Switzerland, where elites make bold predictions that
George Soros, billionaire and founder of Soros Fund Management, at the Davos Economic Forum, January 2016.

The World Economic Forum, WEF, will be held next week in Davos, Switzerland, where global business, political and economic leaders will make predictions about the future and set an agenda for the coming year, usually failing.

Here is a summary of some predictions made in recent years.

European recession

The fate of Europe's economy was a major concern at the May 2022 WEF annual meeting in the wake of Russia's invasion of Ukraine.

The leader, Jane Fraser, told a panel, "I'm very concerned about Europe, which is right in the middle of the storm from the supply problems, the energy crisis and the proximity to some of the atrocities that are happening in Ukraine."

When asked if there was going to be a recession in Europe, Fraser gave a definitive answer: "Yes - and I hope I'm wrong."

Although interest rates in the region have taken a hit and inflation has risen, the EU has so far escaped a recession. A number of analysts predict there will be one in early 2023, but expect it to be "soft". Berenberg, for example, expects GDP (gross domestic product) to fall by 0.1% in the euro area this year.

But Goldman Sachs has upgraded its forecast for the region, saying it no longer sees a recession for the eurozone.

"We maintain our view that eurozone growth will be weak over the winter months given the energy crisis, but we no longer foresee a recession. This reflects a rebound in growth late last year, lower natural gas prices and China's early reopening," Goldman analysts said.

They pointed to a GDP growth rate of 0.6% for 2023, compared with consensus expectations for a contraction of 0.1%.

Nuclear war

Billionaire investor George Soros warned in a speech at Davos 2018 that the US would go to nuclear war with North Korea.

"The US is in a direction of nuclear war, rejecting that North Korea has become a superpower in this field," he said then.

The Obama administration also said in 2016 that this was the top national security risk.

So far, the United States has avoided any military conflict with North Korea. In fact, recent concerns along these lines have centered on Russia, in the wake of its invasion of Ukraine.

The decline of FTX

Cryptocurrency was in a rough patch throughout 2022, but those in the market didn't expect the collapse of FTX, once a $32 billion crypto platform.

Brett Harrison, who served as president of FTX US, told CNBC in Davos in 2022 that the company was at a "very good point" in terms of capital and was looking at acquisitions.

US authorities arrested Sam Bankman-Fried, the former chief executive, in December and charged him with wire fraud, securities fraud and money laundering. Bankman-Fried has pleaded not guilty.

Bitcoin goes to zero?

In 2019, Jeff Schumacher, founder of BCG Digital Ventures, said that the price of Bitcoin could fall to zero. Bitcoin has had a volatile ride, but in 2021-2022 it hit its lowest level since 2019.

US-EU trade agreement

At WEF 2020, then-German Finance Minister Olaf Scholz said he was confident a trade deal between the United States and the European Union would be reached. Scholz, who is now the country's chancellor, said at the time: "In the end, we know that trade is more successful if there are not too many obstacles."

Both sides of the Atlantic have resolved several trade disputes since US President Joe Biden took office in 2021 - but they still appear far from a comprehensive trade deal.

In fact, European countries have raised concerns about Biden's Inflation Reduction Act, arguing that it discriminates against European companies and does not follow international trade rules.

Reorganization of Credit Suisse

Despite media reports in 2022 suggesting Credit Suisse was considering replacing then-CEO Thomas Gottstein, when CNBC asked Credit Suisse Chairman Axel Lehmann about it in Davos, he denied the reports.

"They haven't told me anything and I know it didn't happen, so it's wrong," he said. The Swiss bank announced in July that Thomas Gottstein was resigning./ CNBC


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