Slow down globalization. That seems to be on everyone’s lips at the 53rd Davos Economic Forum. The annual meeting that opened yesterday has become a symbol of the rift between pro-globalization and protectionists. The IMF is currently warning of a “fragmentation” in world trade that could lead to a fall in world GDP of more than 7%. The International Monetary Fund is concerned about the risks of moving backwards as markets globalize. “We face the specter of a new Cold War that could split the world into rival economic blocs.”
Several issues will come to the table at the Swiss alpine resort, such as the trade war between China and the United States and the race for subsidies for factory repatriations. The President of the European Commission, Ursula von der Leyen, has already announced the creation of a “European Sovereignty Fund”. This would support EU industry in the face of rising energy prices. Target: Joe Biden’s Inflation Reduction Act. This protectionist law, which went into effect last August, highlights tensions with Europeans, with cost-cutting for North Americans and massive investments in the energy sector.
Similar state aids have been introduced in China as the country faces a significant slowdown in growth, particularly due to its “zero Covid” policy, but also because of its demographic decline, the first in sixty years. The Middle Kingdom is therefore no longer perceived as an Eldorado in the eyes of investors and many expatriates have returned without intending to return.
Meanwhile, in France, some companies are looking for solutions to the energy crisis. To save costs, Toshiba’s French production sites, for example, have their employees work at night. For their part, some French start-ups are moving to the United States to benefit from anti-inflationary policies.
So can we really talk about the end of globalization? What are the challenges of Forum Davos? Is China’s economic downturn sustainable? Is the French economy at risk from American protectionist measures?