Last week, the annual meeting of the World Economic Forum (WEF) was held in Davos, Switzerland. The meeting was convened under the theme “Rebuilding Trust,” and it brought together more than 300 public figures, including over 60 heads of state and government, as well as leaders from business, civil society, academia and media. The meeting addressed the most pressing issues facing the world, such as climate change, cybersecurity, artificial intelligence, global cooperation and economic growth.
During the proceedings, the WEF released its Global Risks Report 2024, which identified the five biggest risks facing the world in the next two years: extreme weather events, cyberattacks, social unrest, biodiversity loss and geopolitical tensions. The report called for urgent action to mitigate these risks and strengthen the global system of cooperation and governance. In our view, the four themes that featured highest on the agenda were: artificial intelligence, climate change, political and geopolitical risk, and central banks’ next moves.
Regarding the first theme, artificial intelligence, the WEF launched the AI Governance Alliance during the forum, a global initiative to promote ethical and responsible use of artificial intelligence in various sectors and domains. The alliance aims to foster collaboration among stakeholders, develop common standards and frameworks, and support innovation and inclusion in AI development and deployment. This comes only a few weeks after the November’s meeting at Bletchley park in England, in which AI heads of state and government met to agree on a “responsible development” of AI. It also comes just a few months after the tumultuous exit and re-entry of Sam Altman from and then back into Open AI.
Partly related to this theme, the WEF published its “Future of Jobs Report 2024,” which analysed the impact of technology, automation and COVID-19 on the labour market and skills demand. The report projected that by 2025, 85 million jobs may be displaced by machines, while 97 million new roles may emerge that are more adapted to the new division of labour between humans and machines. The report highlighted the need for reskilling and upskilling workers in order to ensure a smooth transition to this new reality, and promote inclusive growth.
On the second theme, the WEF hosted several sessions on climate change, nature, and energy. The sessions focused on the implementation of the Paris Agreement, the transition to net-zero emissions, the protection of biodiversity and ecosystems, and the promotion of clean and renewable energy sources. As part of this and other efforts, the WEF also announced the creation of a “Global Resilience Network,” a platform to enhance the preparedness and response capabilities of countries and communities to cope with natural disasters, pandemics, conflicts and other shocks. The network will leverage data, technology, partnerships and best practices to build resilience across multiple dimensions, such as health, infrastructure, economy and society.
Regarding political risk, clearly everybody’s attention was focused on the result of the Taiwanese elections, which had just taken place the weekend before the meetings, and also on the upcoming elections that will be taking place through 2024, with the US elections featuring high on people’s concerns, for a potential return of Donald Trump to the White House. For geopolitics, there was a distinct sense of fear among the Forum’s participants about a potential extension of the Israel-Hamas to the entire Middle East.
Regarding central banks’ next moves, the declarations by ECB President Lagarde regarding a possible rate cut in the summer took centre stage among market participants. But questions also arose about the timing of the first interest rate cut by all other major central banks. There was a broad consensus that Q2 2024 could be a reasonable compromise for both the Federal Reserve and the Bank of England.
