Davos day four: ‘Too much pessimism’ about European economy, WEF hears – business live

This year’s WEF annual meeting wrapped up with Børge Brende, president and CEO of the World Economic Forum, telling delegates that we are at a critical time.

Brende says this year’s meeting happened

I think we all realize during this week that we came together in Davos at the time of immense consequence and uncertainty.

Political, geopolitical and macroeconomic landscape – all are shifting under our feet. At this very moment the clock is quickly ticking down to meet critical political priorities: driving economic growth, reducing carbon emissions, finding ways to end conflict.

The only way to make progress is to work together, he says.

And (with a nod to Donald Trump?) Brende concedes that WEF’s cooperative approaches may need to adapt to a new, more uncertain era.

There is a new political reality that we are faced with.

The session ends with a bit of news.

Saudi Arabia will host regular meetings of the World Economic Forum, starting from spring 2026, Saudi Economy Minister Faisal Alibrahim has announced.

Alibrahim told delegates:

“We look forward to welcoming the global community again in Saudi Arabia in the spring of 2026.”

[WEF holds various other meetings around the globe through the year, as well as the Annual Meeting in Davos]

Georgieva: AI must not be preserve of the few

The President of Singapore, Tharman Shanmugaratnam, tells Davos that the most neglected dimension of national strategy in most parts of the world is social policy.

He argues that this means maximizing human potential in every segment of the population.

Shanmugaratnam explains:

It means finding ways of recreating social compacts so that people feel some sense of solidarity even between different ethnic groups, different nationalities.

And it means, very importantly, thereby building the basis for political consensus to keep economies open and interdependent.

And those three things must go together, the economic strategy of openness, the social policy of not leaving things to a social market, but intervening to help everyone uplift themselves, and the politics that then allows you to carry on being open.

If any one of those fails, each of them falls apart.

Fink: Europe isn’t working

Christine Lagarde then gets an unplayable delivery here at Davos.

She’s asked about president Trump’s claim to WEF yesterday that the EU does not treat the US fairly on trade.

Q: Is that true?

Lagarde cries foul – pointing out there is “no way” she can either say yes or no.

But she then makes some good points – when looking at trade, you should consider services as well as goods trade.

And while some countries are in a stronger position than others, they all need each other.

If there is one thing that the Europeans have learned over the course of time since the end of the Second World War, is that you cannot go alone, Lagarde adds.

You have to work together. You have to respect each other and you have to understand each other, she insists.

Q: Is anyone on the panel a fan of tariffs?

No hands go up (no surprise there).

Saudi Arabia’s economy and planning minister Faisal Alibrahim, explains that tariffs can work as a tool, as long as they are objectives-driven and time-bound.

He says they could give an economy time to build resilience or leverage, or give space for the private sector to grow some competitive advantage.

The important thing is to keep dialog on the table and keep the orderly, respectful discussion going, Alibrahim adds.

Onto the interest rate outlook, and Larry Fink says the Federal Reserve still have room to cut, to create a steeper near-term yield curve.

But the next few months of data will determine what happens – Fink points out that there are signs the US economy was very strong in the fourth quarter of the year.

So the Fed may pause for another period of time, and they may ease a little bit, he suggests.

Blackrock’s Larry Fink then says he can see a scenario where we see 5.5% on US 10-year yields.

10-year Treasuries are currently trading at a yield around 4.6%, so Fink’s forecast implies a rise in benchmark borrowing costs.

That would be bad news for the UK, as our gilt yields tend to move in line with US debt.

Q: Is the inflation genie back in the bottle?

IMF chief Kristaline Georgieva demonstrates that the head of the genie is back in the bottle, most of the body is in too, but the legs are dangling out.

She then points out that historically, rising inflation has led to a rise in interest rates that caused a recession.

This is first time so far that inflation is being brought down, interest rates are still somewhat high, but growth is still positive (though below historic norms), she says.

Georgieva explains:

If we succeed to bring inflation down but maintain economy functioning so people still have jobs…and more confidence, that would be a very good outcome.

Larry Fink cautions, though, that “the genie may be coming out of the bottle”.

Fink cites increased demand for power for AI systems, and predicts labour shortages that would lift wages – a good outcome for workers, but also an inflationary one. There could also be shortages of materials.

Georgieva: Europe could learn from US culture of confidence

IMF chief Georgieva tells Davos that the world is changing very rapidly.

“We are experiencing a tremendous technological transformation,” she says.

IMF chief Kristalina Georgieva says growth in the US is so strong, compared to other countries due to productivity growth.

The US is “marching ahead” with high productivity, because capital markets allocate money to dynamic firms, she says, such as technology companies.

Also, the US has – relatively speaking – abundant, and thus cheaper, energy.

Lagarde: European leaders must respond to wake-up call