Outlook for 2002 Growth Is Overcast
Nearly 3,000 business and political leaders from around the world packed into a heavily guarded Manhattan hotel Thursday to hear economists, scholars, bankers and diplomats paint a not terribly cheery picture of the prospects for global growth and stability in the coming year.
The litany of warnings given on the opening day of the World Economic Forum was daunting:
America’s declaration of war against the Al Qaeda terror network and the militant Islamic groups Hezbollah and Hamas will further widen the rift between the industrialized West and Islamic East, some experts warned.
The AIDS epidemic in Africa is a “slow-motion holocaust” that endangers not just Africans but also the moral health of wealthy nations that could stop it but don’t, a panelist angrily charged.
Enron’s implosion could trigger additional large corporate failures as creditors question balance sheets and flee from risk, a respected corporate analyst argued.
Economic Ramifications of the Sept. 11 Attacks
The Sept. 11 attacks on the Pentagon and the World Trade Center have taken an even bigger economic toll: The worldwide drop in business travel and long-distance vacationing appears likely to persist, surveys cited here suggest, harming the airline and hotel industries in scores of First World cities and developing-world resorts. Insurance costs are soaring for what real estate professionals term “trophy properties” in major cities.
And although the U.S. economy appears poised for a modest upturn later this year, and Western Europe may slightly outpace the United States, that won’t be enough to turn the world economy around in 2002, economists here suggested.
Japan will remain mired in its decade-long recession, they said, while the Argentine economic crisis will hamper Latin America’s recovery. And the next trade-fueled growth spurt in China is probably a few years away.
Despite this air of foreboding, there was also an undercurrent of defiant celebration at the gathering at the Waldorf-Astoria Hotel, the first large meeting of the international business elite since the September attacks.
The decision to move the forum from its longtime home in Davos, Switzerland, was “an act of friendship and partnership, from Switzerland to New York,” said Klaus Schwab, the Swiss professor who started and still runs the annual gathering.
New York Gov. George Pataki, Mayor Michael R. Bloomberg, and his predecessor, Rudolph W. Giuliani, addressed the group Thursday night to express their gratitude for holding the meeting in the city.
“Spend a lot of your money while you are here,” joked Giuliani, who received a standing ovation. “We would like you to leave as much of it as you can afford right here in the New York economy.”
The forum, which will conclude Monday, may be at once an act of economic solidarity with New York and an occasion for serious philosophical reflection on the state of the world, but it is also a party, an oddly glamorous fusion of a meeting of the International Monetary Fund and a Truman Capote ball.
Insulated from protesters across the street and invisible to journalists next door, celebrities rubbed shoulders with other celebrities and the hundreds of more obscure corporate types whose companies paid $25,000 to send them here.
Announced attendees included rock stars of the business world--from Bill Gates and Larry Ellison to Jean-Marie Messier and Michael Dell--and and of politics--from U.N. Secretary-General Kofi Annan and German Chancellor Gerhard Schroeder to Secretary of State Colin L. Powell and Bill and Hillary Clinton.
For good measure, there was a handful of real stars, from Bono of the group U2 to Peter Gabriel and Lauryn Hill, who would entertain the crowd at an evening gala. (And no glittery New York gathering would be complete without at least one Baldwin brother--in this case, according to the list, Alec.)
Forum, Uprooted From Davos, Draws Returnees
There were also the serious unscripted encounters that have kept participants coming back to Davos forums.
In one, Harvard social historian Samuel P. Huntington, who is celebrated for warning of a “clash of civilizations” between the Islamic East and the Christian West, was challenged from the audience by Amr Moussa, the Egyptian diplomat who heads the Arab League.
Accused of “insulting” Islam and overlooking such all-Christian conflicts as Northern Ireland, Huntington asserted that these internecine disputes lack the “cosmic significance” of Muslim confrontations with the West.
But both the content and the logistics of the forum’s inaugural session were dominated by security concerns.
Outside, police barriers blocked traffic for blocks around the landmark 19th century hotel, keeping protesters as well as commuters at bay, while inside the forum, guards laboriously checked cameras, laptops and cell phones as if the participants were boarding a threatened aircraft.
The forum’s usual focus on global investment and technology trends was refracted through the lens of security fears, with discussions about prosperity in developing nations driven more by a sense of self-defense than idealism or the desire for new markets.
On one panel Thursday--titled “A Safer World: How Do We Get There?”--analysts advocated the expansion of the Middle Eastern middle class as the best way to combat terror networks of the angry and underemployed.
“When you have that, it’s easier to have democratic values and practices,” said Alain Dieckhoff of France’s Center for International Studies and Research.
Yet the prospects for robust growth in the world’s poorer regions seem more distant now than a year ago, economists here appeared to agree.
