Davos Diary Day 5: 2016, wasted booms and pearly whites

As the town of Davos returns to normality and the curtain closes on the 46th annual World Economic Forum, Alec Hogg reflects on his takeaways. It’s a gloomy picture as markets got off to the worst start ever, as Europe and China face headwinds, while the United States looks set to raise interest rates again this year, which will have a profound impact on world markets. While South Africa have these and specific local issues, which lead to the IMF cutting projected growth for 2016 to 0.7%. Alec says the country needs action fast, but leaves with a smile on his face, after watching a subdued Gordhan provide further evidence that Nenegate is proving to be a watershed. This is the fifth and final installment of Alec Hogg’s Davos Diary. – Stuart Lowman

I’m Alec Hogg. This is Davos Diary: Day 5. This is the last day for the World Economic Forum’s 2016 meeting, the 46th they’ve had. What’s the summary? What’s the takeaway from it?

Well, China is under pressure. That we know. Europe is not moving in the right direction. They do have some concerns about the immigration that is continuing there, so a little bit of trouble in that part of the world as well. The markets have had their worst start ever to a year, in 2016. The prices of assets have fallen. The U.S. is going to be raising interest rates. You hear all of that and you think, “My goodness. What kind of a world are we going to be seeing for the rest of the year?”

It isn’t that bad, although the International Monetary Fund has reduced its forecast of world economic growth down to 3.4 percent. That’s still better than last year, at 3.1 percent. There are certain parts of the world that are doing okay. South Africa is not one of them. South Africa has its own issues as we are very well aware. Politically, economically, and structurally there are many issues that need to be addressed. Perhaps that’s the biggest takeaway from Davos this year.

When you consider that there were good times and in the good times, the countries that used them wisely (like some of the oil-producing countries) put money aside… They are going to be able to look after themselves far better in the bad times. Those countries that wasted the boom, as the World Economic Forum Chief Economist Jennifer Blanke told us today, are in for a very tough ride. They’d better start restructuring. They’d better start focusing on doing the right stuff economically or they’re going to reap the whirlwind.

I’m afraid South Africa does fall into that category. We need to see some action. I’m sure, from what we heard from Pravin Gordhan though, that it’s likely to occur. So I’ll leave here with a smile on my face. Then again, is life worth living if you don’t have that ability to show your pearly whites every now and then?

Alec Hogg with Davos Diary Day 5.

Visited 58 times, 1 visit(s) today
Categories WEF