On January 15, 2024, signs were put up ahead of the yearly gathering of the World Economic Forum in Davos, Switzerland.Thank you for reading this post, don't forget to subscribe!
Adam Galisi | cnbc
Decline in Asian markets
US markets were shut on Monday for Martin Luther King Day, but futures trading on Tuesday suggested a slow start to the week as investors awaited more earnings from major Wall Street banks such as Goldman Sachs and Morgan Stanley. Asian markets registered losses, with Hong Kong shares leading the decline, and Japanese shares cooling off from their record-breaking surge.
ecb tug of war
At the World Economic Forum in Davos, Switzerland, European Central Bank policymaker and hawk Robert Holzman expressed the view that the ECB might not enact any interest rate cuts this year. He told CNBC that zero rate cuts are likely this year, a scenario not anticipated by the market. Meanwhile, Mario Centeno, the central bank governor of Portugal, remarked that the ECB is effectively combating inflation, and the medium-term outlook is currently very favorable.
China needs reform
Managing Director of the International Monetary Fund, Kristalina Georgieva, cautioned that China requires significant and structural reforms to prevent a substantial slowdown in growth. Georgieva, speaking to CNBC at Davos, highlighted the short-term and long-term challenges facing the world’s second-largest economy.
AI threatens jobs
The International Monetary Fund’s assessment indicated that the rise of artificial intelligence could result in the elimination of approximately 40% of jobs globally. The IMF warned that high-income countries might be more affected than low-income economies, and that AI could exacerbate inequality.
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While US markets were closed, activity at the World Economic Forum in Davos, Switzerland continued to drive the market on Monday.
The forum’s first day encompassed discussions on a range of topics, from China and artificial intelligence to cryptocurrency and the European Central Bank. Global leaders and intellectuals shared pivotal insights and concerns related to these pressing issues.
It appears that China is grappling with an intractable problem. IMF chief Kristalina Georgieva cautioned that if China fails to address its asset and debt crisis through major structural reforms, the world’s second-largest economy could face an even steeper growth decline.
“Ultimately, China needs structural reforms to open up the economy, make the growth model more inclined towards domestic consumption, and instill more confidence among the people to spend rather than save,” expressed Georgieva.
The IMF also reiterated its forecast that China’s GDP could decelerate if the real estate sector does not improve, projecting a growth rate of 4.6% for this year.
The IMF also asserted that approximately 40% of global jobs could be displaced by AI, potentially causing significant impact in high-income economies.
It is estimated that nearly 60% of jobs could be affected in high-income countries, 40% in emerging markets, and 26% in low-income economies, with the attendant risks associated with AI.
— CNBC’s Vicky McKeever and Sam Meredith contributed to this story.