World business leaders gathering in Davos on Wednesday for the 45th World Economic Forum (WEFE) have called for structural reforms to the global economy to encourage growth.
More than 2,500 business and political decision makers are taking part in the annual forum, January 21-24, under the theme "The New Global Context." Participants in a session on The New Growth Context were told that monetary policy was not enough to encourage growth.
"Policy-makers shouldn't kid themselves," Axel A. Weber, Chairman of the Board of Directors of UBS, Switzerland, said. "They need to deliver policy reforms, not just loose monetary policy." Weber listed labour market and pension reform as especially important, and cited Germany's reforms under the Schroeder government as an example for the rest of Europe to follow.
"Right now structural reforms are the only game in town. We need politicians to act," Min Zhu, Deputy Managing Director at the International Monetary Fund (IMF), a World Economic Forum Foundation Board Member, said.
"Worldwide, the whole banking sector is much stronger than a few years ago" but that "the risks have moved into the shadow banking sector," Zhu added.
Addressing the session, John Rice, Vice-Chairman, GE, Hong Kong SAR, emphasized the importance of infrastructure to global growth.
"You don't have sustainable, inclusive growth unless you have jobs, and you don't create jobs unless you have good basic infrastructure," he said.
"Since governments and banks are no longer funding infrastructure investments as much as they did in the past, more and more infrastructure projects will be funded by private equity," said David M. Rubenstein, Co-Founder and Co-Chief Executive Officer, Carlyle Group, USA.
"Right now the US seems the greatest place in the world in which to invest," he said. However, he cautioned that economic growth there is leaving many behind, especially in middle- and lower-income groups.
Zhang Xin, Chief Executive Officer and Co-Founder, SOHO China, also Young Global Leader Alumnus, noted that China, unlike Europe, is suffering from too much investment and not enough consumption.
"How do we grow consumption? We need tax reform," she said. Although pro-consumption reforms in China are proceeding more slowly than she would like, Xin said that "the anticorruption campaign is working very well." The Co-Chairs of the Annual Meeting 2015 are: Hari S. Bhartia, Co-Chairman and Founder, Jubilant Bhartia Group, India; Winnie Byanyima, Executive Director, Oxfam International, UK; Katherine Garrett-Cox, Chief Executive Officer and Chief Investment Officer, Alliance Trust, UK; Young Global Leader Alumnus; Jim Yong Kim, President, The World Bank; Eric Schmidt, Executive Chairman, Google, USA; and Roberto Egydio Setubal, Chief Executive Officer and Vice-Chairman of the Board of Directors, Itau Unibanco, Brazil.