The storm had already claimed the lives of at least two people in China's Hainan and 16 people in the Philippines
asia11 hours ago
Chinese Premier Wen Jiabao and Russian Prime Minister Vladimir Putin will both address business and political leaders in the Alpine ski resort later on Wednesday, to offer their remedies for the worst economic crisis in 80 years.
Business and political leaders here for the four-day World Economic Forum were extremely glum, saying there is no easy solution to the credit crisis that has torpedoed global growth and major government programmes are needed.
“There are no silver bullets. My sense is 18 to 24 months of very tough economic environment,” Maria Ramos, chief executive of Transnet, South Africa’s rail and logistics company, told Reuters.
“Forty percent of the world’s wealth was destroyed in last five quarters. It is an almost incomprehensible number,” said Stephen Schwarzman, chairman of the leading private equity company Blackstone Group.
“Business will be very different.” A PricewaterhouseCoopers poll of more than 1,100 CEOs set a grim backdrop. Just 21 percent of CEOs said they were very confident of growing revenue in the next 12 months, down from 50 percent a year ago.
Crisis-hit bankers are thin on the ground at the snow-covered mountain town, leaving policymakers to work behind the scenes on ways to fix the financial system, ahead of a summit of the G20 group of big and emerging countries in April and a G8 summit in July.
Ahead of Wen’s speech, a row intensified over Beijing’s exchange rate policy after new U.S. Treasury Secretary Timothy Geithner branded China a currency manipulator last week, using a term the previous administration deliberately avoided for years.
A Chinese diplomat said on Wednesday Washington had enough evidence to know China does not manipulate its exchange rate.
“I don’t think it’s fair all of a sudden to change the position of the U.S. government,” the diplomat said in London, one of a number of European capitals Wen will visit after Davos.
Putin will meet privately with Wen in Davos to share ideas on how the two powers can cooperate on addressing economic problems. No top officials from the new Obama administration are here.
Russia’s stance will also be closely scrutinised. His spokesman said Putin would reach out to investors, who have been shaken by the crisis gripping Russia’s economy but he has previously blamed the United States for “infecting” others.
However, Moscow offered Washington an olive branch on Wednesday, halting a plan to counter a proposed U.S. missile defence shield by stationing its own missiles near Europe’s borders, a Russian news agency quoted the military as saying.
Hopes for a short “V”-shaped recession appear to have evaporated with most business leaders expecting no more than a slow and gradual recovery over the next three years.
“The three-year view is a bit better but the bad news is it is not that much better,” said Tony Poulter, global head of consulting at PwC.
Delegates in Davos were united in the view that an economic upturn is some way off.
Lars Thunnel, head of the International Finance Corporation, the private arm of the World Bank, said he expected economic malaise sparked by the credit crisis to linger.
Stephen Roach, Morgan Stanley’s Asia chairman, agreed the next three years would be tough.
“The concept of a vigorous ‘V’-shaped recovery is for business cycles of the past but not for this post-bubble, post-crisis business cycle. It is going to be a long slog in 2010, in 2011,” he told Reuters.
That grim scenario has left sovereign fund Dubai International Capital wary of making big long-term investments even though it sees asset prices at reasonable levels.
“We’re still very nervous about making some big bets—we see the financial crisis getting worse. There’s not going to be a magic wand solution to the problem,” Chief Executive Sameer al-Ansari told Reuters.
PwC’s Poulter said the situation had deteriorated significantly since September, following the collapse of Lehman Brothers and the sale of Merrill Lynch.
Back in September, only 46 percent of business leaders interviewed thought the banking crisis would affect them but by December that had risen to 67 percent.
Even this gloomy picture—with confidence the lowest in the survey’s seven-year history—may be over-optimistic, given a slew of bad news since it was completed in early December.
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