Davos in shadow of recession, growing disparity
The World Economic Forum (WEF), the annual conclave attended by CEOs and national leaders to assess where Planet Earth is headed, opened in Davos, Switzerland, on Monday under the long shadow of an imminent recession. A WEF survey of economists showed two-thirds expect a global recession this year, with some 18 per cent considering it “extremely likely”. Another PwC survey of CEOs released on Monday pointed in the same direction, with 73 per cent forecasting global economic growth to decline over the next 12 months. This is the most pessimistic outlook in a decade, PwC said, and quite the opposite of the optimism we saw in 2021 and 2022.
Meanwhile, international charity Oxfam, which has been underlining growing inequality for the last few years, stirred the pot further at Davos, claiming the world’s richest 1 per cent had grabbed nearly two-thirds of the $42 trillion in new wealth created since the pandemic kicked off in 2020. This is almost twice what was earned by the 99 per cent at the bottom of the pyramid, the ‘Survival of the Richest’ report said. The divisions at the Forum were further exacerbated with climate change activists led by Greta Thunberg giving a ‘cease and desist’ notice to big oil companies to “immediately stop opening any new oil, gas or coal extraction sites, and stop blocking the clean energy transition we all so urgently need.”
Considering the heat waves and flooding the world has seen, one can expect climate change to be big on the agenda. However, a second round of recession in one decade will be the more dominant issue as corporations and the rich nations count the cost on their economies and businesses. For India, which is registering 6.4 per cent growth, it is not recession but poverty and the increasing disparity that is clamouring for attention. The Oxfam report highlights India’s top 1 per cent owned more than 40.5 per cent of its total wealth in 2021, and in 2022 the number of billionaires in the country increased to 166 from 102 in 2020. However, in tax collection, the poor pay the price. About 64 per cent of the total GST came from the bottom 50 per cent of the population, while only 4 per cent came from the top 10 per cent. A mere 2 per cent tax on the country’s billionaires may be sufficient to fund India’s nutrition programme for two years. To set this right, the Union finance minister should consider a more equitable tax regime in the upcoming Budget.