India Should Not Rely On Catching Companies Moving Out Of China

In almost 50 years of existence, the Switzerland-based World Economic Forum (WEF) has been a sought after networking platform for global leaders in business, politics and civil society. The organisation remains relevant even in today’s digitally networked world. In an exclusive interview with Business Today’s Rajeev Dubey and Joe C. Mathew, WEF Founder Chairman Klaus Schwab explains why, despite multiple doomsday predictions, he believes the global economy will not go into recession. More importantly, who could emerge as winners and losers from the global economic slowdown.

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A cocktail of slow growth, economic nationalism and protectionism is troubling the global economy. Where do you see globalisation headed?

The reasons for deceleration in the global economy are interrelated and reinforce each other. The phenomenal upswing cycle in global economic growth that we have seen in the past was caused or prolonged by qualitative easing. We had an artificial driver in global economic growth rates in many countries. That ammunition of monetary easing has come to an end. So, we have to go for fiscal policies, though there are some questions over whether fiscal policies in the current situation will lead to an invigoration of economy or not. Another factor (that contributed to this economic slowdown) is that people are losing trust in the future. Trade wars, populism, Brexit (are all examples of this). I would also add increasing environmental risks and rising sea levels (to this list of risks). In the past, people were always optimistic about the future. Now you have a kind of tipping point where people have become much more pessimistic and rising pessimism leads to less consumption and less investments.

Do you believe we are headed towards a recession? What can we do to minimise its impact?