Davos 2010

As it was expected, the main topic at this year’s World Economic Forum in Davos was on the global economic outlook.
Among the numerous articles that covered the event, I particularly liked Martin Wolf, the Financial Times’ chief economics commentator’s recent piece that shed more light on some of the key trends (t. What the world must do to sustain its convalescence).
Here is an excerpt:

’So what did I make of this year’s annual meeting of the World Economic Forum at Davos?
(…)
The big questions for this year are how quickly to withdraw the monetary and fiscal stimulus and which should be withdrawn first.
(…)
Yet exit is merely the most immediate challenge. Two somewhat longer-term tasks lie ahead: financial sector reform and durable rebalancing of demand in the world economy.
(…)
But far too many countries are relying on export-led growth as the way to balance their withdrawal of domestic stimulus. This is a recipe for stagnation. The Earth cannot, after all, hope to run current account surpluses with the people of Mars.’

And that last paragraph, my thoughts exactly. How on Earth (literally) will developed countries’ economies recover with a lack of local manufacturing and without raising export tariffs? Surely, developed countries cannot continue to buy cheap BRIC produced goods forever? The BRICs don’t buy European or US made cars, white goods, machinery, electrics, etc. – or do they? One sided trade will not pull the world out of recession. I truly believe that a recovery will require a concerted effort and a rebalancing of the global economy.
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