Davos: Business and political leaders struggle with 'deglobalisation' at World Economic Forum

World leaders, financiers, and chief executives are worried over signs that the framework of open markets is breaking down

German chancellor Olaf Scholz speaks at the World Economic Forum in Davos.

World leaders, financiers, and chief executives said they were leaving this week's World Economic Forum (WEF) in Davos with an urgent sense of the need to reboot and redefine "globalisation".

The framework of open markets that has shaped the last three decades of commerce and geopolitics looks increasingly wobbly as trade spats fan economic nationalism, a pandemic exposes the fragility of global supply networks, and a war in Europe could reshape the geopolitical landscape.

Palpable worry

Worry over signs of this breaking down were palpable at this week's reboot of the WEF, an annual gathering of the world's well-heeled, most of whom have championed globalisation.

IMF chief Kristalina Georgieva summed up the mood of the event, saying she fears the risk of a world recession less than "the risk that we are going to walk into a world with more fragmentation, with trade blocs and currency blocs, separating what was up to now still an integrated world economy".

"The trend of fragmentation is strong," she added.

International Monetary Fund director Kristalina Georgieva said she fears the risk of a world recession less than 'the risk that we are going to walk into a world with more fragmentation, with trade blocs and currency blocs, separating what was up to now still an integrated world economy'. Picture: Clemens Bilan/Getty

Corporate executives in Davos were among the loudest in decrying signs of a world reverting to blocs defined by political alliance rather than by economic co-operation.

"We cannot let globalisation reverse," said Jim Hagemann Snabe, chairman of German industrial powerhouse Siemens. "I will not leave Davos with that thought. 

I will leave with the thought that we will need more collaboration

Bloc building

Volkswagen chief executive Herbert Diess said he was concerned by the discussions of new bloc building as the German carmaker ramps up production in the US. 

"Europe and Germany depend on open markets. We would always try to keep the world open," he said at a briefing on the sidelines of the summit.

Officials clutched at new euphemisms for describing a new style of globalisation, with 'multilateralism' a favourite among buzzwords including 'reshoring', 'friendshoring', 'self-sufficiency', and 'resilience'

"Multilateralism works," said German Chancellor Olaf Scholz. "It also a prerequisite for stopping the deglobalisation that we are experiencing." 

Not all are unhappy with how globalisation has frayed since the last time officials and executives gathered in January 2020, just before the pandemic took off.

"Brazil's out of sync with the rest of the world," Paulo Guedes, Brazil's economy minister, said. "We stayed out of the party. There was a 30-year party of globalisation. Everyone took advantage. Everyone integrated the value chain. We were cursed because we were out of this thing. Now, we're blessed." 

• Reuters